It's hopefully the future of Nostr DMs with very strong privacy without leaking metadata. If it holds up to those expectations, it should be adopted by other clients that include DMs. NIP-17 has been somewhat of a band-aid to hold us over while MLS messaging on Nostr was in the works.

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That said, Nip 17 does do some things that NIP-EE seems not able or not ready to do. This from NIP-EE: "It is not possible to share group state across multiple Clients. If a user joins a group from 2 separate devices, their state is separate and they will be tracked as 2 separate members of the group." That's pretty huge, since we all live cross-device these days. It's not a limitation of MLS, but it could be a limitation forced by how MLS integrates with Nostr in this particular way, I'm not sure. Either way, on NIP 17 as a single npub you can operate cross-device (say Macbook and iPhone) with relative ease.
NIP-17 won't die, it's better suited for social media app capabilities, and it's enough secure for that usecase too, it just sucks for groups. NIP-EE is good for the signal usecase
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