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Ultracold atomic systems are among the most promising platforms that have the potential to shed light on the complex behavior of many-body quantum systems. One prominent example is the case of a dense ensemble illuminated by a strong coherent drive while interacting via dipole-dipole interactions. Despite being subjected to intense investigations, this system retains many open questions. A recent experiment carried out in a pencil-shaped geometry [Ferioli Nat. Phys. 19, 1345 (2023)] has reported measurements that have seemed consistent with the emergence of strong collective effects in the form of a “superradiant” phase transition in free space, when looking at the light-emission properties in the forward direction. Motivated by the experimental observations, we carry out a systematic theoretical analysis of the steady-state properties of the system as a function of the driving strength and atom number $N$. We observe signatures of collective effects in the weak-driving regime, which disappear with increasing drive strength as the system evolves into a single-particle-like mixed state comprised of randomly aligned dipoles. Although the steady state features some similarities to the reported superradiant-to-normal nonequilibrium transition, also known as cooperative resonance fluorescence, we observe significant qualitative and quantitative differences, including a different scaling of the critical drive parameter (from $N$to $\sqrt{N}$). We validate the applicability of a mean-field treatment to capture the steady-state dynamics under currently accessible conditions. Furthermore, we develop a simple theoretical model that explains the scaling properties by accounting for interaction-induced inhomogeneous effects and spontaneous emission, which are intrinsic features of interacting disordered arrays in free space. Published by the American Physical Society2024