It is "on" by default, but the user still has to have the 'ssm:StartSession' permission (and probably others) to open the SSM session, and for some(?) operations you also still need to have the appropriate credentials (ssh keypair or a password) to login via SSH.

SSM Session Manager is one of the (if not the) preferred way to manage SSH access to instances in AWS. It's kinda hairy to set up, but it removes the need for bastion hosts/jump boxes for most use cases. From my experience I would say it is quite common.