Amazon has moved a lot to EPUB. But sideloaded dictionaries still require MOBI. There's no alternative format for custom Kindle dictionaries.
The MOBI dictionary format is barely documented by Amazon, and the MobileRead wiki has partial community documentation, but a lot of the dictionary-specific format had to be reverse-engineered from kindlegen's output byte by byte.
I was building a Greek dictionary with 80K headwords and 452K inflected forms, and kindlegen couldn't handle it - 12+ hours on a Mac under Rosetta, frequently running out of memory and crashing before finishing. Kindling builds the same dictionary in 6 seconds.
Binaries for Mac, Linux, Windows: https://github.com/ciscoriordan/kindling