Maybe I am wrong but I thought I heard the console versions of RDR2 have settings varying from low-medium. Maybe even some settings lower than PC's lowest. Gears 5 seems to be in a similar boat, but it ultimately doesn't matter if the final product looks great.

Either way, visually fidelity is going to be high next gen. So lowering settings to potentially better accommodate Series S specs could still result an impressive looking games. More importantly, it would be the 9th gen experiences with visuals still beyond 8th gen.

We've already went over scaling a million times. Well optimized console games traditionally don't use ultra graphics settings that take too big a hit on performance with relatively little gain in visuals. Fact is if you have 2 different SKU's with such a gap in specs, one console will always be held back by the other. Like Otto said, Minecraft with Path Tracing runs at 1080p/30fps on Series X. Now you tell me what looks better, Minecraft running at native 4k or 1080p with path tracing? Now sure, you could say Path tracing also takes too big a hit on resources and it's not going to be viable in big AAA games. However, what about Indy games? I'm sure they could come up with some pretty cool games that could use path tracing as a gameplay mechanic, but throw Series S in the mix and that's already not possible. 

I think this will be a big factor compared to the ps5, which won't have those kind of limitations, at least not with their exclusives. They can push their ambitions as much as possible and think about resolution later. While Series X will be a lot like the X1X is now, it'll play the same games as on X1 and Series S, just better. Meaning most exclusives will be forced to "waste" all that extra resources on native 4k/120fps. Ps5 exclusives, on the other hand, can and probably will go for maximum visual fidelity in 1440p/30fps and can push the SSD tech without having to worry if it will run on lower specs too. Now, you tell me what will have the most potential for true next gen experiences that are unlike anything we've seen today?  

You understand that "ultra graphic settings" is just an arbitrary name? Settings that are currently called "ultra" will be called "medium" or "high"  in future games. Settings that are currently called "medium" or "high" will be called "low" in future games.

Diminishing returns of current "ultra settings" compared with current "medium" or "high" settings will probably be very similar to diminishing returns of future "medium" or "high" compared with future "low" settings.

Minecraft + Quake 2 RTX are extreme examples where the raytracing version needs one or two magnitudes of performance than the non-raytracing versions.

So let's have a look at other games which aren't 10 year old indie games or 20 year old classics.

• Battlefield V at native 4K without RT or at 1080p with RT. Now you tell me what looks better.
• Metro Exodus at native 4K without RT or at 1080p with RT. Now you tell me what looks better.
• Control at native 4K without RT or at 1080p with RT. Now you tell me what looks better.

That's not so easy to answer and opinions will widely differ, especially with different TV sizes and distance from the TV and preferences.

And why shouldn't it be possible on Lockhart with reduced resolution and/or reduced number of rays?

I know how graphics settings work on pc. My point is that if developers have a game that's completely optimized to run at 30fps/1440p on Series X, it's not going to be using overly expensive graphics settings that can be scaled down that much on Series S. Not using them is the whole point of console optimization. The only thing they could do is lower the resolution and we would be looking at sub 720p on Series S compared to 1440p on Series X. There's no way MS will target sub 720p on Series S as that'll look like a blurry stain on a 55 inch tv. Therefore, they will likely aim for 1080p on Series S and it will limit the ambitions of the Series X versions by just having native 4k and a higher fps, pretty much like we're seeing now with X1X and ps4 pro. 

Minecraft and Quake 2 are the only games we've seen so far that can run in full Path Tracing, which is different than the type of Ray Tracing we're seeing on games like BF on pc that just add some reflections and shadows. It's far more impressive as it reads and account for every element of the game’s graphics, whether above, below or behind the player’s camera. It's what we're seeing in Pixar movies and basically it can completely alter the mood of a game. It's also far more expensive to use so it's unlikely we will be seeing it in AAA games. However Indy games should be able to do some pretty cool things with it where it can become an integral part of the game design and not just something you could toggle on and off. However, games like that would likely be running at 1080p/30fps on Series X and there's no way they could make it run on Series S.

That's wrong, no matter how often you repeat your false narrative.

Lowering the resolution ain't their only option. There are a lot of other options to tweak the performance for the devs.

And even if they took the lazy way by just reducing the resolution... how the heck do you come from 30fps/1440p to sub 720p? 900p or dynamic 720p - 900p would be much more probable, if the Lockhart has at least one third the GPU performance and almost the CPU performance of the Series X. 

I played on Pro, not sure if the were low-medium on it, but the visuals themselves were plenty satisfying to me. And although I won't buy lockhart (nor XSX so far, that can change depending on their exclusives) I doubt the visuals will be bad, they just won't look like the nextgen experiences of PS5 and XSX but most consumers wouldn't really care.

Actually since CPU would be the same we could even see something strange like 720p60fps on Series S for a 1440p30fps Series X title right?

PC gamers still use disks? ~ Linus Sebastian. 

Going from 720p to 1440p will use around twice the resources, whereas SeriesX is 3 times more powerful. So if you have a game running at the same fps and graphics settings on Series S and X, you would have drop below 720p (probably 540p) if it's running in 1440p on Series X. 

Like I said, if Lockhart is real, all of MS's exclusives will be designed so they can run at 1080p on Series S and Series X will have the exact same games, only running in native 4k/60fps (and 120fps with the X1 cross gen titles). It's going to be very interesting to see how a 4k/60fps Xbox exclusive will compare to a ps5 exclusive that's running at 30fps/ 1440p. Ps5 games will simply have more than double the resources left by not going native 4k. All of which they can spend on physics, ai, world simulations and overall fidelity, while still running at a resolution that will look noticeably sharper than what most people are used to on the base current gen consoles.    

Actually wouldn't be 4x more resources going from 720 to 1440p? And that is ignoring textures and effects.

I still think you are being overly pessimistic and think MS is really dumb.