I understand Xbox's reasoning for doing it since a lot of people can't get a new Series X or Series S console. And this ensures more sales for them.
But as an Xbox Series X owner it's a bit frustrating because they are holding back the potential of this powerful hardware by doing so. If the games are made to run on inferior hardware, then they aren't being made to fully take advantage of the new hardware. So I personally hope they move away from this policy so I can really see what my Series X can do. I paid a lot of money for exactly this reason.
That's not how Xbox's cross-gen is working though. The games have a One version and a Series S/X version, but will install the correct version depending on the system. If I pop in my Assassin's Creed Valhalla disc into my One, I'm playing the One version. But if I take that same disc and put it into my Series X, I'm playing the Series X version on it, not the One version on the Series X.
The concept Microsoft is working with is that when you buy a game, you don't need to worry about what system you're buying it for. You just buy the game, and when you want to play it, you get the version designed for the system you are currently playing on. And additionally, even if you jump between systems, all the saves and such get transferred too, as it's considered the same game, not a different instance. There are some exceptions out there, like the most recent Call of Duty, but for the most part, Xbox games are singular purchases now rather than needing to buy the same game multiple times just to play it on the latest systems.
Developers are going to go for the lowest common denominator and then just put a shiny coat of paint over it for the "upgraded" version. You are not going to get a state-of-the-art engine under that coat of paint. The newest upcoming Unreal engine, for example, is going to sputter and lag on the older systems.