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This is where a lot of people don't understand how Hardware works. Basically this approach is to be like a high end PC, meaning that the power is used to dress up games rather than create new ways on designing them, even though they can do that as well. Not all games need state of the art hardware to achieve what the developers have already in mind for a game. A good example is a Linear FPS game which does not need a super fast SSD in the XSX or PS5 to be made or does a general platformer etc. They can achieve what they have imagined on current hardware or even less. Just look at BOTW on the Switch which was created on WiiU hardware, no one is complaining about the design on that game being held back by the WiiU. Its completely up to the developers when it comes to designing good games not so much hardware.

PC hardware works very similar which is Phil's point. Play a 10 to 15 year old PC game and your high end PC hardware will decorate the game making it stand out and not only look better in all aspects with its graphic options but also feel and play better too. The hardware is not wasted, its just being used in other ways. Closed platforms like the next gen consoles means adding scaling options for consoles is going to be a regular thing hence the Cross buy options they are doing now with Cyberpunk and more.

Not one game have i seen yet on both Xbox and PS events where i cannot see them running on current gen XB1s and PS4s. Not all developers are going to take advantages and risks on creating new game designs, not yet anyways. However they can dress up and make older games look a lot better in the mean time, just like how PC's operate.