The two answers above cover the idea, so here are the rough numbers behind it.
A normal bc1q input adds about 68 vbytes to a transaction, and a taproot input about 58. Say you have ten small bc1q coins. Spend all ten in one payment when fees are 20 sat/vB, and the inputs alone cost around 13,600 sats. Consolidate them into one coin on a quiet day at 2 sat/vB and that costs about 1,450 sats, after which the payment needs only one input, about 1,360 sats. You save roughly 10,800 sats, but only if you consolidate while the mempool is quiet. Do it at 20 sat/vB and you've just paid the fee early.
The same arithmetic explains dust. A 1,000-sat coin costs about 1,020 sats to spend at 15 sat/vB, so it's worth less than nothing until fees drop.
On privacy, merging coins does more damage than people expect. It tells the next person you pay how much you hold, because they can see your change. The many-inputs, one-output pattern also screams "same owner", which is exactly what chain analysis looks for. And if you ever merge a KYC exchange withdrawal with coins that had no name attached, those coins carry your name from then on. No later transaction undoes that.
So consolidate only coins from the same source, do it when fees are low, and use a wallet with coin control so you decide what goes together.
The two answers above cover the idea, so here are the rough numbers behind it.
A normal bc1q input adds about 68 vbytes to a transaction, and a taproot input about 58. Say you have ten small bc1q coins. Spend all ten in one payment when fees are 20 sat/vB, and the inputs alone cost around 13,600 sats. Consolidate them into one coin on a quiet day at 2 sat/vB and that costs about 1,450 sats, after which the payment needs only one input, about 1,360 sats. You save roughly 10,800 sats, but only if you consolidate while the mempool is quiet. Do it at 20 sat/vB and you've just paid the fee early.
The same arithmetic explains dust. A 1,000-sat coin costs about 1,020 sats to spend at 15 sat/vB, so it's worth less than nothing until fees drop.
On privacy, merging coins does more damage than people expect. It tells the next person you pay how much you hold, because they can see your change. The many-inputs, one-output pattern also screams "same owner", which is exactly what chain analysis looks for. And if you ever merge a KYC exchange withdrawal with coins that had no name attached, those coins carry your name from then on. No later transaction undoes that.
So consolidate only coins from the same source, do it when fees are low, and use a wallet with coin control so you decide what goes together.