The latter. I'm very definitely not at that level either, but looking at German words from books that couldn't be found on English Wiktionary, I was able to find them on German Wiktionary. One example would be "Weihnachtsfest" - not sure it's "officially" a compound word, though if you know "Weihnacht" and "Fest", then the meaning should be clear. In any case, it shows up as a single word and trying to "split" words made up of other words is an exercise in insanity.

Another example is "krächzender", which might also serve to give some idea of the particular pains in processing German text. It's not in English Wiktionary, but krächzen is, and is a verb. So "krächzender" is the adjectival form of the verb, and if you know "krächzen" and the general rules around adjective formation it would probably be obvious. But would you rely on a computer to parse those rules, or would you want a table with all the declensions laid out? And if you're building a vocab list for a book, is it a separate entry in the list, or does it fall under the verb?

Obviously, German Wiktionary only has definitions & explanations in German so it's not great for beginners, but any tool that's trying to automatically do stuff with German text would likely benefit from using German Wiktionary.

I have no idea if it's true for other languages, but I wouldn't be surprised if it's also true for other major languages spoken by Wikipedia users (e.g., French, Spanish, but maybe not Chinese).