From what I read on Twitter you have to rebuy the digital version of the game again. The Series S is only BC with digital games. 

ouch that sucks. but I understand there would be no easy way to solve it.

Well you cannot put a disk in a console that doesn't have a disk drive.

Oh really?

I am kinda worried about the potential of this holding back games this decade. It'll be able to do 1080p or 1440p at first but by say 2026-2027 will it still be able to run the most demanding games at an acceptable level? I suppose performance could always be reduced all the way down to 720p 30fps at low settings down the line if that's ever needed so there's a significant buffer but the extra work needed to optimize games for this already low end GPU and slow ram I could see causing problems years from now. I've already seen a developer express concern over that. I hope this worry turns out to not have any real impact.

The CPU is the same in both consoles, I don’t see anything happening in six or seven years that is possible on one console but held back because the S doesn’t support it.

Plus it’s not like resolution is the only thing that can be cut. They can have a lower frame rate or less effects like ray tracing.

Well if you're picking up Series S as just a side console, the drive space shouldn't matter anyway, as most of your games will be on PS5. That's why in all these years I never bothered to upgrade from my ~35GB(Something in that range) PS3; most of my 7th gen gaming was on 360, and after a while when my PS3 began to fill up, I just deleted old games I wasn't playing anymore.

If you're buying Series S for Game Pass and/or Xbox exclusives to play on the side, it shouldn't fill up that quickly. And when it does, you just have to get rid of the old games you're not playing (especially with Game Pass, as they won't be around forever anyway).

If MS goes the mid gen upgrade route again, or something like that, there will be a $300 or less XBSX digital by 2023 ish.

If some of the rumors are true that PS5 is planned to be a shorter 5 to 6 year gen max, like in the past, and MS follows suit, then worst case scenario, XBSX becomes the XBSS of the following gen, since XBSX would basically be the upgraded model, just launched at the start of the gen.

If you want to remain at your present gaming quality of life, then upgrade. If you don't want to have to upgrade, pay more for XBSX now. If you don't care, then just deal with 720p-900p upscaled to 1080p eventually. By 2025 ish, 4k should have a much larger presence in the TV market, so who really will want to have an XBSS at potentially 720p, upscaling to 4k?

It's mainly some developers showing concern that has me worried. I'm mostly concerned about extra work getting it to run at an acceptable level on the Series S causing issues. It took a lot of effort to get games like Doom running on Switch though of course the S is closer to the X and PS5 than the Switch is to PS4 and Xbox One so it wouldn't be as much extra work as that. There won't be a way to know for sure how much exact impact it'll have for a good while.

I do think I'd like if that rumour turns out to be true since then the lowest common denominator for hardware would be somewhat less outdated.

I'm no expert by any means but I think that if you are rendering a game at 1/4 the resolution (including textures) then you'll need just about 1/4 the memory bandwidth, and the Series S has almost half the bandwidth and more than half the amount of memory of the Series X. Besides, everybody here seems to have suddenly forgotten the role of the SSD when it comes to offloading work from the RAM (which I find surprising seeing how many threads about SSDs we had a couple of months ago).