Wayland is intended as a simpler replacement for X, easier to develop and maintain. GNOME and KDE are expected to be ported to it.
Wayland is a protocol for a compositor to talk to its clients as well as a C library implementation of that protocol. The compositor can be a standalone display server running on Linux kernel modesetting and evdev input devices, an X application, or a wayland client itself. The clients can be traditional applications, X servers (rootless or fullscreen) or other display servers.
Part of the Wayland project is also the Weston reference implementation of a Wayland compositor. Weston can run as an X client or under Linux KMS and ships with a few demo clients. The Weston compositor is a minimal and fast compositor and is suitable for many embedded and mobile use cases.
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Pros
Pro Simplifies the graphic stack
Wayland simplifies the graphics stack by trying to force everything through a GEM/DRM stack and straight into the kernel. Furthermore, it manages compositing itself.
Pro Better security
Reduced use of root and isolating the input and output of every window.
Pro Best for touchscreen
The complete gesture support makes it way better compared to x
Pro Wayland exclusive apps
In addition to xorg app running under xwayland, there are many wayland only apps, such as waydroid, which lets you run the android userland directly on linux.
Pro The default
If you don't have a nvidia graphics card, ubuntu and fedora will use wayland instead of xorg. As of plasma 6, wayland will be the default session, but distros may change this.
Pro Performance
Compositing performance is several times faster than xorg.
Pro Prevents screen tearing
Pro Easy to maintain
Wayland has no drawing APIs. Instead, a Wayland client gets a DRM buffer handle, which is practically just a pointer to a graphics memory. Practically Wayland does not care how the client draws to that buffer, it only copies the client's buffers on the screen.
The removes a lot of complexity (because Wayland just pushes the complex stuff to the other layers of the stack) and by making the clients responsible for all the rendering, they can be smarter on how they do things like double-buffering for example.
Pro Best Linux user experience overall
Very responsive Touchpad performance + 3,4-finger Gestures, Smooth Animations and No Screen Tearing. Also compatibility for old applications using XWayland.
Cons
Con XWayland handles popup windows poorly
Con No mechanisms to configure input
Tools like xinput and xmodmap that help customize keyboard and mouse input are incompatible with Wayland, have no corollary, and there is no clear roadmap for providing their functionality.
Con Little driver support
Most closed sourced drivers do not support the KMS/shared-GEM/shared-DRM technologies on which Wayland works. While this may be okay for open source purists, who only want to use graphic cards that have open source drivers available, it may not sit well with people who spend a lot of money for high-end graphic cards only to get some crappy 3D performance.
Although it should be noted that NVIDIA has declared that they will start supporting Wayland, it may take years before Wayland fully supports most high-end drivers.
Con A big mess
Wayland breaks everything and then expects others to fix the wreckage it caused on their own expense.
Con Breaks everything
Stuff that worked 20years is now broken...
Con Superior technology but still not ready for everyday use
Wayland is great for developers, it's both technologically and architecturally superior to X, but X is the de-facto standard display server protocol for the *nix world for so long that you can basically expect everything to work with X (user applications, graphics drivers, DEs, etc. etc.) which cannot be said for Wayland. Actually there are still too many issues with Wayland that I think it's still far from being ready for the general users/consumers today. It seems there are still years of work ahead before Wayland can fully replace X as suitable for everyday use other than running some GUI text-editors and IDEs for coding, and maybe by that time both Wayland and X will be replaced by something newer... Wayland surely has superior technology and design, but those don't necessarily mean much for the general users today (remember the RISC vs. CISC war back in the 90's, and that back when Linux kernel was first developed, it is arguably inferior to the MINIX kernel in terms of technological advance and architectural design)
Con Most desktops are not supported
The only destops that can currenty run on wayland are GNOME and Enlightenment, KDE has limited support and many other desktops and window mangers won't switch. Its also almost only working on GNU+Linux which negates the to be an X11 replacement.
Con Not much used in the Unix world
Currently its only nearly usable in the Linux world, everything else still uses X11.