It’s not fully integrated in the sense that you can use your Lemmy account to message over Matrix. Rather, you can add your existing Matrix handle to your profile and then a fancy “Send Secure Message” button is displayed under your profile, which just links to your Matrix account. I like the simplicity of it, as it leaves the security aspects to apps and services that have considerably more resources than Lemmy has at the moment (Element and Matrix are being used and improved by different governments, militaries, and other organisations).

EDIT: Element has started using Rust for their back-end implementation, so maybe Lemmy can use that library one day as well.