  The next-generation (3G/XG) ground-based gravitational-wave (GW) detectors
such as Einstein Telescope (ET) and Cosmic Explorer (CE) will begin observing
in the next decade. Due to the extremely high sensitivity of these detectors,
the majority of stellar-mass compact-binary mergers in the entire Universe will
be observed. It is also expected that 3G detectors will have significant
sensitivity down to 2-7 Hz; the observed duration of binary neutron star
signals could increase to several hours or days. The abundance and duration of
signals will cause them to overlap in time, which may form a confusion noise
that could affect the detection of individual GW sources when using naive
matched filtering; matched filtering is only optimal for stationary Gaussian
noise. We create mock data for CE and ET using the latest population models
informed by the GWTC-3 catalog and investigate the performance loss of matched
filtering due to overlapping signals. We find the performance loss mainly comes
from a deviation in the noise's measured amplitude spectral density. The
redshift reach of CE (ET) can be reduced by 15%-38% (8%-21%) depending on the
merger rate estimate. The direct contribution of confusion noise to the total
signal-to-noise ratio (SNR) is generally negligible compared to the
contribution from instrumental noise. We also find that correlated confusion
noise has a negligible effect on the quadrature summation rule of network SNR
for ET, but might reduce the network SNR of high detector-frame mass signals
for detector networks including CE if no mitigation is applied. For ET, the
null stream can mitigate the astrophysical foreground. For CE, we demonstrate
that a computationally efficient, straightforward single-detector signal
subtraction method suppresses the total noise to almost the instrument noise
level; this will allow for near-optimal searches.
