Yep, this is something that has progressively gotten worse with each model released with the floating screensaver.
1st Gen ATV: All photos from the local library randomly shown, no duplication. (Remember no option for home sharing or shared iCloud photo libraries on 1st Gen ATV - all synced via iTunes)
2nd / 3rd Gen ATV: Only about 100 photos from a home sharing library displayed however a shared iCloud photo library did randomly display all photos with no duplication.
4th Gen ATV: Both local home sharing library and shared iCloud photo library now only show about 100 photos.
I thought with the expanded storage on the 4th Gen ATV we may get back to some of the functionality found on the 1st Gen ATV (all photos from local library can be randomly displayed), but not only did that not happen they also killed the "workaround" of the iCloud shared library. Disappointing.
Come on Apple...fix this really stupid bug...use the solid state memory of the Gen 4 ATV for this most useful feature!