VRR televisions show double the refresh rate for Flight Simulator. So if you use a VRR TV the framerate is definitely uncapped, but you’re not getting 120 fps. The simulator can go up to 60 fps but it’s very rare. So if you see 40-120 Hz on your TV that means the game is running at 20-60 fps in reality.
The Series X is not powerful enough for this game. It may be a strong console in its own right but Flight Simulator is just too demanding, so framerate drops are common, especially at airports and close to the ground. Sometimes down to single digits, lockups and crashes. We will have to wait for the next Xbox to get adequate performance out of this.
As for it getting better, sure it will be. The developers will continue to optimize, although there’s only so much they can do with this hardware. Content-wise it is going to get better and better as well.