Which is better for film Atmos codec in Apple TV device (PCM) vs Apple App on smart TV (DD+)?

The Apple TV 4K box will output Dolby Atmos in Dolby MAT format, uncompressed like PCM, with a sub-stream that represents the object based mix, to audio devices that support this. Content from commercial online streaming provider apps do not get stripped of Atmos meta data. In fact, it is very similar to Dolby Digital Plus with Atmos, as that is how it streams to the device.

What you may have heard or read about stripping Atmos information, is regarding local media files with Dolby True HD with Atmos (i.e. Blu-ray rips), and certain third party apps for the Apple TV box that allow local media sharing. Dolby True HD with Atmos is not supported with inclusion of Atmos, through the Apple TV box, as it can’t be converted to Dolby MAT by the Apple TV box.

It does not apply to content in the Apple TV app on either the Apple TV box, or on smart TVs, or on third party external streaming devices. That would be equal quality for those, unless your audio system supports Dolby Digital Plus with Atmos, but not Dolby MAT (rare these days).

I also have 7.1.4 physical speakers

Do you then use an AV receiver? Which model?

Nice.