First, you have to set the output format under "Settings" / "Video and Audio".
For example, 4K SDR 24 (24 Hz). If you now activate "Match Frame Rate" and "Match Dynamic Range" under "Match Content", depending on the film, the system switches between HDR and SDR, as well as between the different frame rates (23,976, 24, 50, etc.). However, the resolution always remains constant at 4K, so that films that are available in 1080p, for example, are always upscaled to 4K.
Apple TV already does upscaling quite well, but it can definitely be done better. People who have a high-quality home theater at home often have a projector with corresponding high-quality scaling, or dedicated video processors (MadVR Envy or Lumagen Radiance). These video processors can upscaling much better than Apple TV can. Therefore, it would be desirable to have an additional option to automatically set the native resolution. So you need another switch called "Match Resolution" in addition to the existing switches "Match Dynamic Range" and "Match Frame Rate". I hope that Apple will listen to my wishes and take this into account in a future update. I hope this helps