Modular monoliths offer a solution to handling complexity in Rails apps without resorting to microservices.
Challenges with the traditional Rails structure include models becoming overloaded, circular dependencies, and slow testing.
By implementing a component-based approach, Rails apps can benefit from explicit boundaries, faster tests, and easier extraction of components.
Real-world tradeoffs of modular monoliths include better scalability for complex business logic but can be overkill for small apps or cases where microservices are more suitable.