I think they subsidize and batch small payments, so the fees are manageable. Their approach has several benefits, but also a few problems. The most fundamental one would be that as fees increase, the wallet becomes less usable from an economic perspective. The constant swapping between layers just adds up. We saw that earlier this year when fees were super high during the ordinals nonsense. If you had your own lightning channels (with enough liquidity), it wouldn't have affected you at all. But Muun's system become problematic during that period. It's not clear to me whether they can simply tweak and optimize this system or need to fundamentally rethink it. There are some smart people working on it, I'm sure they have a few ideas.