How anonymous is XMR?

Could you please elaborate on the level of anonymity offered by XMR, the Monero cryptocurrency? I've heard it's renowned for its privacy features, but I'm curious about the specifics. For instance, does it use advanced encryption techniques to obscure transactions? And how does it compare to other privacy-focused coins in terms of keeping user identities concealed? Understanding these details would help me assess XMR's suitability for my financial needs.