NIP-05 definitely relies on DNS, it doesn't allow onion services
Nobody interested in decentralization is using it. For example, people who only use tor-compatible nostr implementations aren't using it because DNS isn't tor
Discussion
I like the idea of NIP-05 resolving handshake.org domains because then you don't have to change anything about the UX or the flow, clients when noticing a handshake domain just have to add the "hns.to" before the URL and they'll find the json, so for example me.nostr/.well-known/nostr.json just make it hns.to.me.nostr/.well-known/nostr.json and done.
This is idea usually loudly booed because another chain. But it's a pretty frictionless update.
Sounds pretty frictionless but in the long run the best solution I see is a DNS alternative built on doggie coin. Wrote about idea in this article nostr:naddr1qqrxuethg389xq3qwamvxt2tr50ghu4fdw47ksadnt0p277nv0vfhplmv0n0z3243zyqxpqqqp65w7fdn8s