The usual theory put forward is that these measures have been taken to protect the performance on the XBox, even though a lot of people have PC’s that can handle more than we currently, and even if they didn’t there are settings that can be tweaked to improve performance.
Visual fidelity of clouds is a hot topic on that front. These ideas are aggressively denied, but when I look back at videos I shot back in 2020, things seemed smoother back then, than they were in some cases now.
The amazing thing to me is that back then I was running an Intel 9900K with an Nivida 1080. Nothing special at all, and I was simply amazed that I could run 1080p, at Ultra, with 400/400 hacked via the config file. And it was smooth! All the more shocking since I had just come from years of X-Plane.
Then SU5 came along, and the sim was a stuttering mess. They had messed around with offscreen terrain caching for the XBox, and destroyed the PC version in the process. A little while later they added the option to change that terrain caching, and that improved things no end, but even at Ultra its not the same as it was. I can turn my head about in the cockpit, and see cars appear, and disappear, and this with me on the ground.
Many things have improved over the last few years, and XP12 has been a huge boost for me as I have a 24GB 3090 now. But quite a few things have been lost along the way as well.