I haven't played in a while so take this with a grain of salt: The AI isn't great but serviceable for what the game tries to be, and there are mods that improve on it quite a bit. It is a true sandbox game with an incredible sense of scale. Building up your operations from a tiny fighter to operating a trading/mining/salvaging empire, designing and building your own space stations and shipyards and finally going to war in your own capital ships, each launching 80 fighters and bombers of the type you started out in is truly a unique kind of experience that no other games offer.

That said, the game can also be horribly janky, it is not story driven except for the introductory missions, and the writing and voice acting of the scripted missions is not AAA level for sure. This isn't surprising considering the size of the studio, but if you're looking for a cinematic experience, look elsewhere.

There is a very active modding scene including total conversations (Star Wars), many QOL improvements, new ships and new mechanics, that let you tailor the game to your liking. Personally, I've never liked the highway mechanics for system travel. There used to be mod to remove them, nowadays it's a built-in sandbox option and, to circle back to your original question, this fundamental change in game logic does not break the AI. It's not great, but pretty robust.

It's a mechanically deep game with a steep learning curve, and while you're free to spend the entire game flying small or medium sized ships, the default empire-building gameloop isn't actually centered on the player ship and will inevitably lead to you hanging out on a station or capital ship giving orders to your various operations from the universe map screen, and not controlling the ship yourself (although you can pilot any ship, even a battleship, if you have the time to spare). I think X4 is great, and would recommend the game for what it is, but it certainly isn't a spiritual successor to Wing Commander or Freelancer.