You inferred it correctly. The new observability feature of spring boot 3 is designed keeping system performance monitoring in mind and not Tracing/logging. Thus a small data set serves good enough for the assessment.

The feature of management.tracing.sampling.probability is offered to the devops/ developers to configure the probability value based on specific requirement for each app.

Setting the probability to 1 does negatively affect the application and eventually it does comes down to Trade-Off Between Observability and Performance.

High probability does affect Increased CPU usage, Higher memory consumption and Greater network I/O to send traces to the backend.

For Production, my recommendation would be to reduce the exposure gradually e.g. Keep the probability higher (less than 1) in first 24 hours and then gradually decreasing it. This way, you would have a good data set to see how your application is behaving without affecting performance.