I started valuing the enclosure that comes with the 10 dollar versions (e.g. the M5stack atom).

Since most use-cases for me are literally 1 sensor connected to an Atom, it (largely) fixes the enclosure problem. Although I'd like to have more DIN rail mounted options.

ESP8266 is not recommended for new projects though. Its age is starting to show.

Is that an Espressif or an ESPHome recommendation?

Were I designing a product that uses one of these I would certainly not use the ESP8266. For hobby projects, if I can buy them on Amazon, eBay or elsewhere, the 8266 remains a valid choice (for me.)

I'm not sure where you're buying your ESP8266, but mine run less than a buck (on a little dev board).

Aliexpress -> From $0.99 -> four-pack of ESP8266 for $3.19.

Even less when they have a sale.

Or you could buy a rpi2040 for 99 cents.

You can get a three pack of esp32 dev boards (with headers) for $6 from Aliexpress. For that you get:

1) Wifi.

2) Much more robust ecosystem, including esphome (the subject of this post).

Wasn't there previously some problem with using Pico boards and you had to use a fork because PlatformIO were trying to get vendors to pay (for something they never asked for), and then kicking up a big fuss when they didn't pay up. I say vendorS because they are now trying it on with Espressif also. It seems like a very strange funding model. Did that get fixed? It was a depressing state of affairs when I last looked.

That'd get you the chip which you'd have to solder to a board. Possible and feasible but not as easy as plugging in an ESP8266.

You would not only have to solder it to a board, you would also have to provide a radio peripheral. At which point you're pretty much looking at a pico W, which just isn't as cheap or small as a D1 Mini (or similar).

Plus the 99 cents for flash chip.

Plus the 99 cents for the PCB.

Plus the 99 cents for misc parts like regulator and caps.

Plus the $4 for the wifi module.