I have a Denon AVR8500HA but don't yet have Atmos overheads, so it's a 5.0 configuration (the mains have 15" woofers driven by a separate Parasound A21+ amp so no sub needed). I get the Netflix dropouts within the first few minutes of watching "Drive to Survive" when Atmos is enabled in the 2021 AppleTV+ app; if I disable Atmos or set the AppleTV to re-encode as 5.1 (maybe the same thing, but two different settings), there's never a problem.
I found that, with Atmos enabled, the sound is better even in the 5.0 configuration. The image is less localized to the front, and there are phantom sounds coming from between the fronts and the sides, which is really stunning at times. That doesn't happen with 5.0.
The other new datapoint: we watched 3 "Drive to Survive Episodes" during New Years's Eve: the first with the 2021 AppleTV with Atmos enabled. Dropouts every 3-4 minutes, power cycled the AppleTV without improvement. I finally couldn't stand it anymore and switched to 5.1. Then I went into the AV closet and replaced the 2021 AppleTV 4K with my original AppleTV 4k. I made sure Atmos was enabled and there was not a single droppout or chopping sounds during the next two episodes. Not one, and Atmos sounded terrific.
This definitively points to a hardware issue in the AppleTV 4K 2021 version or a software issue specific to that version.
My Atmos overheads are being installed in a month or two (speakers are backordered ) and I really want this to work by then.