Is the tau one of the least dystopian factions in this universe?
Broadly speaking yes. Less citizens of the Tau are going to experience overtly horrible conditions of deprivation at any given time than any other faction save the Craftworld Eldar, but the Tau are still a horrific society by most metrics.
They are a highly effective police state and surveillance state, where the Imperium struggles to perform either due to scale.
They have a rigid caste system and no Tau is truly free to choose their own life, similarly non-Tau have specific roles to perform in their society and are quietly considered inferior.
They are prone to suicidal misunderstandings of the nature of the galaxy, forming deals with Dark Eldar or dismissing the threat of Chaos as mere superstition, generally to horrible results.
There's strong implications of mind control, within the Tau species themselves and between them and some of their client races.
They are ultimately a militarily motivated faction seeking to dominate all other factions, planets that refuse to join their empire peacefully are militarily invaded when the opportunity arises even if they are otherwise friendly.
They perform highly unethical experiments on their own people, lobotomising some to use them as vessels for the recorded memories of a dead tactical genius, freezing others to use them for later conflicts, infecting some with the genestealer curse out of curiosity. Sterilisation is not off the books for some populations.
The Fourth Sphere expansion fleet was lost in the Warp for a time and returned considering humans something too dangerous to let live in the empire, or at all, and seek to genocide them. The Tau still use them as a military resource even though they are mildly perturbed by their mass murdering of civilians.
The nice(r) version of the Tau is the Farsight Enclaves. Farsight is still a caste system adherent and a racist, but he does give more freedoms than the empire and better understands the true dangers of 40k. Downside is it's still a military dictatorship when you get down to it.