I use it all the time and have for years. Just seems like a weird feature to lock behind about.config and say it's not supported while they still support things like Pocket.
The people who make it their business to go through Firefox looking for features to remove almost got it, but the public outcry against its complete removal seems to have deterred them for now.
I remember when compact was hidden - apparently this was a change driven by telemetry. It was possible that there's an overlap between those who use compact and those who turned off telemetry. I wouldn't be surprised if something similar also occurs with Pocket being left on too.
If compact breaks in a future update, it'll probably be removed altogether. At that point, best option would be userchrome customisation.
IIRC, this change was made ahead of the impending UI overhaul. This combined with the Windows 11 getting bigger touch-friendly UI elements understandably didn't sit well with many people.
In about:config look up userChrome.CompactContextMenu-Enabled and set it to true to enable the setting. When enable Compact (not supported) under Density option in Customize Toolbar panel.
In about:config, you can set the flag browser.compactmode.show to true.
Then if you right-click on the toolbar and select "Customize Toolbar...", there's a dropdown "Density", which now contains an entry "Compact (not supported)".
This compact mode was part of the previous Firefox design (Photon) and was declared unsupported with the latest redesign (Acorn), presumably because one central design element of Acorn is the tall tabs, which can show text hints under the tab title, like "PLAYING" to indicate that this tab is playing audio, or "MUTE TAB" if you then hover over the favicon/speaker icon.
Oh that thing. Yeah I had set the compact mode though other ways, with the "userChrome.css" file, where I have better control with more possibilities. I was just not sure what he was referring to, as the opposing example with "Pocket" confused me. (Also tagging @boredsquirrel@slrpnk.net for the reply, so I don't need to spam for every reply. Hope that's the correct approach.)
Firefox doesn't generate income, except maybe the Pocket feature. It really shouldn't need that much maintenance, just check it before doing big UI redesigns. Most releases probably don't impact it.
Well, arguably it is broken since the last redesign. You need non-compact tabs to fit additional tab infos in there, e.g. that a tab is playing audio or using your camera.