First of all, hardware can be updated and is updated. Hardware is not static over the years, it will grow along with software, try to keep up with software. When the settings ranges are decided, Asobo/MS take the current “spectrum” of GPU’s and CPU’s and RAM amounts into consideration. It does not require any additional software development to improve Ultra quality, or get the FpS up for lower levels.
My two cents about the compromises needed: I love making screenshots. For screenshots, I need a working Ultra mode. If that means 10FpS for me, I take that for granted. I think Ultra mode should have a separate status, it should not be scaled down along with other settings. Ultra mode must be optimal performance, not optimal FpS, but optimal quality. I hope the Asobo/MS people will separate out Ultra, accept it will not be flyable for everyone (e.g. XBox), the Ultra mode needs not to be flyable, to be usefull. For flight, set medium or high.
When the Nordic update came, they scaled down Ultra down along with the other levels. That turned out to be an awful decision. I hope for MSFS E3 release, Asobo/MS will not primarily look at FpS performance. I prefer graphics quality over framerate, especially for the Ultra mode.