So how does this work in reality though? Most of the feed is sponsored content. Does that mean that for paid users they would only see posts from their own friends? As in, they get the intended experience of fb?

Imagine paying to get the product a company pretends it is delivering for free. And they still mine your data to sell to the highest any bidder.

Relevant

https://youtu.be/5iNLeWnkW4s?si=IcchyyOSROLIsGwL

This is a terrible take. Maybe someday your livelihood will be challenged by technology and you’ll get to see why.