Absolutely there is nothing wrong with 26" wheels on a mountain bike. In fact with the small frame size I use, Its perfect.

With larger frames there's nothing wrong with 27.5" thats popular now either. Both sizes have their advantages. For med size or larger frames I wouldn't rule out either if you really like a specific new bike and it feels right.

Perhaps for serious competitive mountain biking there is a specific size that works best depending on the course. Sometimes its 26", Sometimes larger.

As far as being obsolete goes, I could care less. In fact a 26" tire is one of the criteria I used when buying a new bike in 2018. I know I'll be able to buy new 26" tires for my bike longer than I'll ever need anyway.