GUYS I FIXED IT. I MADE AN ACCOUNT JUST TO SHARE.
Anyone reading this, I am sharing after 1 day of excruciating troubleshooting. Few things that are NOT factors: cables (I use fairly generic cables, only one of them is 8K and is not in the chain.)
My setup is ATV4K -> Hue Sync Box -> LG C2 -> (eARC) Sonos Beam
Dolby Vision (60Hz) and Dolby Atmos work, together with Hue Sync.
What I had to do:
- Swap to port 2 or 4 of the Hue Sync Box if not already using it (higher bandwidth)
- Hue Sync App go to Sync tab -> Three dots -> Advanced -> Dolby Vision enhanced compatibility and switch it on. It will give a warning about "degraded image" ignore it, it doesn't do anything. Your picture will likely reset, and your TV will show HDR mode. This change set my ATV4K back to a generic HDR mode, not DV and reset most image settings.
- Sync should now be working correctly, turn it on to verify (duh ofc, as it is basic HDR and not DV)
- Go back to ATV settings and switch Dolby Vision 60Hz on. It should now keep the sync AND work with DV.
- Change whatever additional picture/audio settings you want, they don't affect anything.
I have now watched several movies with Dolby Vision + Atmos + Hue Sync all working correctly.
Apparently the "enhanced compatibility" setting used to be called HDMI compatibility (you can see this in older Reddit threads).
You're welcome, Merry Christmas and enjoy <3