I still don’t quite get the motivation for “don’t use pydantic except at border” — it sounds like it’s “you don’t need it”, which might be true. But then adds dacite to translate between pydantic at the border and python objects internally. What exactly is wrong with pydantic internally too?

Could be wrong, never used Pydantic. But looking it up it seems like it's used for validation/typing of external data. Sounds like it's mainly going to be doing schema validations. So, your data arrives at your domain layer and you have guarantees based on Pydantic's validations. At this point, your validations are going to semantic in nature based on your domain; what value is Pydantic bringing?