kota1, Apple uses Dolby MAT to decode the Atmos and produce M.LPCM with Atmost meta data. Most modern surround processors display this correctly as Atmos. Some older units show M.LPCM even tho it is Atmos. Because most of the decoding is done in the ATV and sent over in PCM this allows all the tweaks to the AppleTV X CPU to do the decoding in a very dejittered way. But that is not the main source of improvement. The audio data on the HDMI is radically dejittered VS all other HDMI devices I have measured. So the Atmos that comes from the AppleTV sound remarkable VS other gear simply because the HDMI is extremely dejittered. Suddenly you gain a 3D soundstage, depth, delinatition of instruments, nuance, emotion, subtly. Its like going from a cheap Walmart stereo to a high end DAC. The musical scores of movies are so good they distract from the movie for me. I got lost just a few days ago listening to the orchesrta behind nearly every minute of the TV series Picard. There is a french horn or a flute or something in nearly every scene. The performance of each of these instruments was captivating. It defies my understanding how these wonderfully recorded soundtracks have been lost this whole time covered over by terrible HDMI. Blurred into a flat lifeless loss of all detail.
I have clients using local UPnP music servers. I have one guy who took the AppleTV X and put it into the Oppo input and used his modded Oppo to pick off the SPDIF and fed that to a WADEX. He set the appleTV to 2 channel. He said the sound was stunning. He also flipped to the stock AppleTV and said it was terrible.
Its wonderful for sound. The sound improvements are the biggest part of the improvements.
AppleTV does top out at 48/24 uncompressed. It can do 32 channels of that. While its not DSD or 192/24, 48/24 is still really good for most things.