I've not used xz, I'm sure it's good, but the point isn't really about which compression algorithm is the best in the world, but which works best in the (depressingly limited) real world conditions.
If it is any indicator, current versions of FreeBSD and some Linux distros have "xz" as part of the base system, along with their gzip and bzip2 counterparts, including xzcat/xzless/etc., newsyslog/logrotate compression options for xz, xz-compressed tarballs for source distributions (tar.xz / txz), as well as binary packages for FreeBSD compressed with the format.
LZMA compression has gained a lot of traction over the past few years.
Thanks - I meant to update my comment after I went and looked up xz, I've used 7zip and LZMA before, but I've never directly come across a .xz file, odd!
I've not used xz, I'm sure it's good, but the point isn't really about which compression algorithm is the best in the world, but which works best in the (depressingly limited) real world conditions.