The fix for this is to disable Atmos in Apple TV’s audio settings. I can’t say if ATV Atmos works properly with Atmos speakers but in my 5.1 Denon driven Klipsch speakers, Atmos signals from ATV doesn’t work well.
Atmos soundtracks from the ATV4K sound comparable to, or better than, Dolby 5.1 surround through my Sony HT-Z9F soundbar. It's also a simple 5.1 setup (3.1 soundbar & subwoofer plus a pair of rear speakers). Are you saying Atmos from sources other than your Apple TV device sound correct through your system?
While Denon and Klipsch are well regarded, I would suspect your Denon's Atmos implementation or it's current setup/configuration regarding Atmos.
It's worth noting that the ATV processes incoming Atmos streams and re-encodes to Dolby Atmos MAT - essentially the Atmos metadata and multiple channels of uncompressed PCM audio. While this is legit according to Dolby, some sound systems, including some Denon receivers, have issues with this.
Here's an interesting read that discusses Atmos and the various forms it takes: https://www.nakamichi-usa.com/the-ultimate-dolby-atmos-guide. Also Apple Support's article about setting it up: Set up Dolby Atmos or surround sound on Apple TV with a sound bar or AV receiver - Apple Support
Atmos from Apple TV is muffled and distant
