This is nice, but I'm confused about one thing: how can instance owners ensure illegal content such as CSAM doesn't get cached on their servers if defederation is not a thing?
While it may not be the most secure, for many casual users the level of encryption provided in cloud chats is good enough for the convenience of smooth cloud sync, which generally doesn't work with E2E messengers and I frequently lose messages when I restore my phone or get a new one. At least they say the encryption keys for cloud chats are scattered across multiple jurdistictions so they wouldn't be able to hand over anything (other than public chats) unless someone got a court order in bunch of different countries at the same time. I would definitely trust them more than WhatsApp even though the latter uses the Signal protocol, but I don't trust Meta to not collect metadata or possibly have other backdoors as well.
Many features existed in Vanced before YouTube pulled a bait and switch on users and put existing functionality such as background playback behind a paywall. Also, they explicitly refused to add support for things such as downloading videos, even though that also has perfectly valid non-piracy use cases.
(The YouTube Premium download feature is bad anyway because videos downloaded that way are artificially DRM-protected when the original streams are DRM-free can be downloaded using something like yt-dlp.)
Discord already has a huge problem with spam as-is. Yes, it may suck to be randomly locked out of your account when you haven't done anything wrong, but if they removed the requirement altogether it would just open the floodgates even more. Even if you don't trust them fully, they're not some random shady website that's likely to leak your number or use it for advertising. I've been regularly providing my phone number to big services like Discord for years and have never once received spam calls or texts for them. In the incredibly rare case that I do get spam it's always some Hungarian number rather than a foreign one, and they probably just got my number from some public database. It's much more common to get spam via email instead.
Either way, it's pretty easy to get a burner SIM or use Google Voice (if you're in the US), or services like getsmscode.com which provide disposable phone numbers that work with hundreds of major services for 10 cents per SMS, and you can even pay with crypto.