So I think there is a lot of confusion around what's coming, and I've been trying to clear things up in my own mind about what the new standard will actually mean to how the smart home works. So here is the summary I've got in my head, correct me if I'm wrong as there are plenty of more knowledgeable folks out there.
Matter
Is an application layer, that sits on top of an IP network. It's a standard that sets out authentication, security, and command standards for device communication. It requires a device to act as a Matter Controller (hubs if you will), which could be a smart screen or speaker or traditional controllers like HE / Smartthings / HomeAssistant etc. Apart from any prohibitive costs involved, there shouldn't be anything stopping smart platforms from getting certified to market themselves as able to communicate using the Matter standard. I'm just not sure if a certified controller HAS to have Thread capabilities or not, but looking at the certified devices list it appears not.
ZigBee Alliance to CSA
ZigBee Alliance has led the change by using their Zigbee Cluster Library (ZCL) as a starting point for the application layer. Similarly to how (at least if companies actually follow the standard) most ZigBee devices can easily talk with controllers from other companies, the Matter application standard should allow for Matter compliant devices to be controlled by any Matter Controller. This will make compliant WiFi devices very easy to control locally, plus will make it easy to communicate with Thread and IP over Bluetooth devices.
Thread
Although thread is similar to Zigbee, in that it uses the same wireless (802.15.4) standard, it doesn't actually specify the application layer unlike what ZigBee already does. Thread uses IPV6 addresses to address devices over the mesh (unlike the 16-bit ones for Zigbee), and requires a controller to act as a Thread Border Router to translate the devices over regular IP-based ethernet networks. I'm assuming it's a NAT (Network Address Translation) type situation occurring here.
Zigbee
So what about ZigBee? In theory ZigBee meshes can still interact with Matter as long as whatever device that is acting as the coordinator is Matter compliant and able to translate the Matter application commands into ZigBee ZCL equivalents. I'm guessing this is what we will see from companies like Philips Hue. The Bridge will be updated to support Matter, but the devices themselves won't be. The Bridge may communicate over the IP Network using the Matter standard, but translate communication for the ZigBee devices similarly to how the Thread Border Router translates at the network layer.
Existing ZigBee platforms, think Hue, IKEA, Tuya, etc may just update their hub/controller to be complaint and continue to sell ZigBee devices for their systems (especially if Matter device compliance costs more) for some time. Eventually though, more and more devices will shift to Thread/Wifi, but I don't think ZigBee will be dead overnight though.
What about HE?
Obviously the team will evaluate their plans going forward, and I'm not sure if there are any catches to certification (apart from cost), but there wouldn't be anything from what I can see that prevents the HE platform from supporting Matter over IP with current hardware. Future hardware could of course add a Thread capable radio to support newer devices once they become readily available, but I don't think there really needs to be a rush.
Matter could make it easier to communicate with other ZigBee gateways, say the IKEA Tradfri, for devices that maybe don't play nice currently. The best result though, would be a plethora of Wifi devices that are updated to play nice with Matter. This would make it MUCH easier to officially support devices like say TP-Link Kasa if the application standard was consistent.
Anyway, that's the summary in my head at the moment. Can anyone see where I'm way off or have missed a crucial part of the puzzle?