I thought the point of XeTeX was bidirectional support (e.g. Arabic and English text in the same line), hence the palindromic name.

LuaTeX is a kind of successor to XeTeX. Biggest thing is that xelatex / latex / etc all had to use fixed size memory management while luatex supports dynamic allocation (which means no more "TeX capacity exceeded, sorry." dreaded error message)

Dynamic memory allocation is not always a desirable feature. If I were running a service like Arxiv, I would much rather have fixed memory management than dynamic.

Similarly, if I was running TeX in web assembly, in a tab in a browser I'd much rather hit "TeX capacity exceeded, sorry." than have it try to scuttle off with all the swap...