> It has been my understanding that when records are continually inserted & later deleted that the space doesn't get automatically reclaimed, rather a backup and restore is required using gbak.

Your understanding has been wrong. Freed space is reused.

> Otherwise, as time passes and the db allocates more pages and develops more 'unused space' the performance of the db degrades.

On contrary. If you pack data pages to full, the performance will fall.

> I have read in older threads on other sites

Firebird team don't bear any responsibility for opinions of
third-party ignorants.

> Are you saying that this is no longer an issue? Can a Firebird db be used in an OLTP scenario without performance degradation due to db page 'fragmentation' (again, for lack of a better term)?

THIS never was issue. Performance degradation can be result of other
reasons. The most frequent one is bad transaction management in user
application.

SY, SD.