The internal SSD is fast, and there’s something to be said for finally abandoning spinning rusty metal, but when I made my own 27" i5 iMac purchase in late '17 I decided I wanted to keep my large iTunes library (36,000+ songs) on the internal drive. That, plus the considerable premium Apple charged for its internal SSD made me instead choose the 3Tb Fusion Drive option.
For the most part I’m satisfied. I use the iMac for writing, for music composition (Ableton Live and virtual instruments, in addition to MIDI instruments connected), and photography (Lightroom + tens of thousands of images sitting on an external spinning 8Tb drive). On rare occasions I’ll get a brief slowdown, but that’s a usually something OS-related, like having for some reason to rebuild the LaunchServices database and making me wait when I right-click on a document to bring up app options in ‘Open With’.
I just looked at Apple’s site and was shocked that they removed options for larger-sized Fusion drives (I paid $1949 for my 3.8GHz i5 with 8Gb RAM and 3Tb Fusion drive), evidently to help push people with more storage needs up the price ladder for an SSD. I think in September 2017 the price to upgrade to a 3Tb Fusion Drive was $300. Since then SSD prices have fallen, so I’d probably consider the $700 for the 1Tb SSD Apple now offers as the largest internal storage option. But I’m still not sure I’d spend that much money.
Your real-world speeds won’t be much slower if you got a cheaper (and possibly more capacious) external SSD for storage. Samsung’s 1Tb external USB 3.1 SSD is $169 and the 2Tb version is $350, or half what Apple wants for the (somewhat faster) internal 1Tb.
If I had to buy an iMac right now that’s what I’d likely do: get the 256Gb or 512Gb internal SSD option for my essential files and apps, then buy an external SSD for my non-essential ones. (Plus a a large spinning drive for video, music and images, and big honking external spinning drive for local backups.)