Yes, definitely. To me, the idea of a chat server that doesn't federate is as absurd as setting up an email server that doesn't federate. I understand that today people know more contacts with email addresses than XMPP addresses, but if we ever want to free ourselves from the current walled gardens, we need to stop treating chat as something that only happens in walled gardens.

Some people get worried about the idea of "federation", thinking that it somehow means their server is less private, and their data is being spread across a mesh of servers, and stuff like that. That's true in some decentralized/distributed chat protocols, but not in XMPP. Connections between servers only happen on-demand, similar how when you send email between different email providers, they will connect to each other to deliver the messages.

However we do have a feature which allows disabling federation access for specific accounts, for example to prevent kids from communicating with anyone outside their own Snikket server. This is a feature I want to expand on, so that you can permit communication with a limited number of approved contacts on other servers.