I'm coming in a bit late in the game here, but I thought I'd add from my experience.
I have been using the Time Capsule (TC) since their very first models appeared. When Apple decided to get out of the wireless router business, I started to explore other options for a direct replacement for the TC. Sadly, there isn't any, at least, not an exact match to include an internal drive.
What I found is that I had two basic options:
- What works best for backups.
- What works well for backups and best for being a wireless router.
The former is a NAS. Like others here, I settled on a Synology NAS and it has been near flawless for Time Machine (TM). The only hiccup was when the backups stopped working and the resolution was to update the operating system on the NAS. I have been using this solution since 2016.
For the latter, I have tried both routers from Asus & Synology (yes, they offer routers as well). Both routers support adding an external USB drive to be used for TM.
In the long run, I decided to exit the Apple networking ecosystem entirely and migrated over to the Ubiquiti UniFi system instead, replacing my aging Apple networking hardware one piece at a time. I have been running in this new configuration for over 6 years now without issue. My NAS is still included with this setup, but my TC now sits on the shelf as a "museum piece."