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XMPP allows unencrypted messages and leaks metadata - Signal does neither.
Signal is basically a privacy enhanced text/SMS/phone replacement. I can give my phone to someone in person and they can immediately start "texting" me on Signal - this is a feature (as well as a con to some people).
People advise against Whatsapp because while it uses Signal to encrypt message contents, they take no effort to minimize the collection of metadata - Signal's been compelled by court to present all data it has on its users various times and the only info they have is the day/time you signed up for their services and the last day (not time) one of your clients pinged their servers - Source: https://signal.org/bigbrother/
I have yet to find any other free service that collects this little information and works just as well as a normal non-encrypted messenger. Even Signals sticker packs are end-to-end encrypted - Source: https://signal.org/blog/make-privacy-stick/
What metadata does XMPP leak? AFAIK only when a message was sent, roughly (in large increments) how large the message was, the server of the sender knows from who to which server, the server of the recipient knows from which server to who.
I find it strange that Signal somehow doesn't know when a message was sent, and from who to who; how would they ever make this possible?
Also, you say you have yet to find any other free service that collects as little data... How about most e-mail providers? Not Google and Microsoft of course, but most e-mail providers only need a name which can be made up as well. You hm also host your own email server, then you are in control. All of this is true for XMPP and Matrix, as well.