Part of me likes the concept, because there are many people out there whose biological family were dysfunctional, abusive, unstable, or just non-existent. When it applies to biological bonds, the word "family" doesn't mean much to those people. However, when it comes to close friends, romantic partners, etc., those people are able to provide the support and encouragement and love that biological family members are meant to.
But I feel like troons use "chosen family" to build themselves not healthy support systems, but echo chambers and hugboxes. Mom thinks that changing your name to Epheimeryxssa is a bad idea? Your "chosen family" will encourage you and even help you choose a middle name! Dad thinks that you should live as your preferred gender for longer than three months before shooting yourself up with hormones? Your "chosen family" will point you to all of the "informed consent" clinics within 100 miles! But they can't drive you there, because they all have PTSD and anxiety and driving is just too much adulting for them.
There are definitely many LGBT people out there whose families are genuinely awful and may have shunned them for their orientation or gender identity, leading them to find a "chosen family" instead. But I don't think that those people are the people inventing fancy termin0logy and waving flags everywhere and encouraging children to hate their genitals.