SteamOS and Bazzite both use Xwayland through gamescope which is the worst option as it seems https://github.com/ValveSoftware/gamescope
>Avoid XWayland. It added 3.13 ms of latency, more than all other effects combined.
I'm not sure I understand. If X11 software requires a X11 server and you have a Wayland compositor, how do you "avoid" XWayland?
gamescope is a custom wayland compositor that Valve built for gaming... In steam big picture mode there is no xwayland or anything, just gamescope.
What you are reading from the readme notes that it calls into xwayland only when gamescope (wayland compositor) is nested within another compositor (say kwin or mutter).
gamescope itself is wayland only, and when run on SteamOS is has no xwayland latency...