Really appreciate the detailed answer. I think the primary benefit (and the reason I raised this topic) is having the UI run at a higher refresh rate, for example 60Hz or 100Hz and easily play back content at different frame rates without mode switches.
For anybody that is interested, mode switching for wayland doesn't seem to be on the horizon so maybe VRR is the way forward after all https://github.com/xbmc/xbmc/issues/20614