Reading a short deconstruction of Free Software praxis I thought it warranted a longer reply than would typically fit into a a GNU Social post, so here goes.

The main criticism is that the Free Software is merely individualistic, that it fails to recognize the socially embedded nature of software in the 21st century and that users often don't have much choice about what software they run.

The problematic analysis crystallizes when it comes to outreach: telling people to use free software because otherwise they are exploited on an individual level is not a very effective appeal because it essentially puts the weight of the entire oppressive system on their shoulders by presenting it as a simple choice: you choose to be exploited. If everyone just saw this simple truth exploitation would cease to exist! This is clearly false, in the same way that people rarely have a choice when it comes to participating in other oppressive social relations. The answer is never to sever oneself from society, but to change it.

If you're talking about software inside of companies, where most working people spend most of their lives, then this criticism is true. Unless you are a software developer above some level of the rarely acknowledged but actually existing pecking order then some technical manager and maybe a management committee will decide what software gets installed onto systems within a company or which cloud systems are rented out. In that situation a change in software can only occur if you become the senior technical manager or can bring enough pressure to bear upon the central committee. Companies are rarely run democratically and so this can be a difficult feat to pull off and may require some amount of consensus building and charm offensives.

However, outside of the workplace people really do still have a genuine choice about what software they install and use - even if that might not be immediately apparent to them due to understandable lack of education on technical matters. This might change in future as companies seek greater lockdown, but for now it remains the case. So even if you are labouring within a coercive structural arrangement of wage slavery under Late Capitalism, in your few hours away from the sweatshop it's still possible to make an informed choice about which apps you install and what operating system you prefer. You don't have to appeal to the better nature of some management steering committee in order to change your software.

This type rhetoric breeds elitism (perceived or actual): we give off the message, implicitly, that using free software makes us more virtuous than those who don't

Well no. I actually don't care whether or not I implicitly appear to be virtuous. I didn't develop any of my Free Software projects because I wanted to be beatified. I'm not seeking anyone's approval when I'm using Emacs or Debian, and that's kind of the whole point. You should have the freedom to do what you want on your own system without begging for someone's approval within a structural relationship of inequity.

we should point out that software should be a public good, and that it's generally irrelevant what governments and institutions use: what matters is that we control what we use

Yes software should be a public good, but it also matters what software institutions use - particularly if they claim to be acting in the public interest. If an institution is using proprietary software made in a different country under a different jurisdiction then by definition it cannot exercise full control over how it uses that software. The proprietor will decide how the software functions and institutions may get little or no say in the matter.

A more general but also important realization should be that non-participation of this kind is a privilege, not an effective political strategy.

It's not really clear what "non-participation" is being referred to here, but if it means non-participation with proprietary software then that isn't actually a privilege. That is it is not "a special right, advantage, or immunity granted or available only to a particular person or group." as defined by the dictionary. Even if you are poor and marginalized you can still use Free Software. It requires greater privilege to be able to pay for expensive proprietary software and be treated favorably by the proprietor.