I complained about this a few years ago on HN [0], and produced some screenshots [1] demonstrating the scaling artifacts resulting from fractional scaling (1.25).
This was before fractional scaling existed in the Wayland protocol, so I assume that if I try it again today with updated software I won't observe the issue (though I haven't tried yet).
In some of my posts from [0] I explain why it might not matter that much to most people, but essentially, modern font rendering already blurs text [2], so further blurring isn't that noticable.
The "It did" was about the mechanism (Wayland did tell the clients the scale and expected them to render acccordingly). Yes, fractional wasn't in the core protocol at the start, but that wasn't the object of discussion (it was elsewhere, as you can see in the sibling threads that evolved, where I also totally agree this was a huge wart).
Linux does not do that.
> It's strange that Wayland didn't do it this way from the start
It did (initially for integer scale factors, later also for fractional ones, though some Wayland-based environments did it earlier downstream).