To be fair, the Apple TV does a decent job of upscaling the image. I haven’t noticed any significant difference between setting it to native or leaving it at 4k. The Nvidia Shield has horrendous upscaling but that doesn’t seem to be the case with the Apple TV
I also have not found any reason to switch it to lower res and not let aTV do the upscaling (apart from playing back single-frame 3D). I would even imagine aTV has far more powerful CPU and GPU than any consumer television. And Apple maintains their software in shorter cycles than most TV vendors do.
This depends 100% on the TV you have and the algorhythms in use, not to mention the post signal processing available and the sophistication of it. So it's not really a hardware issue at all.
I can assure you in my view, the ATV 4K does not do as good a job upscaling a 1080p picture to 4K as my Sony 900E does. I've done a head to head comparison and the Sony has a better-looking picture in all cases.
Now maybe when Apple improves their algorhythms and introduces adjustable post signal processing in the box it will equal or surpass my TV's capabilities eventually.
There are other reasons for wanting the Native 1080p display output correctly in my particular case -- again something that might not apply to everyone -- my TV reduces the amount of picture adjustments I have with a 4K signal, in particular I cannot stretch or zoom an image. So with some 4:3 content, I can't change the aspect ratio in 4K to fill the screen, or in some cases compress an as broadcast stretched image to appear normal.
So this is not really good news. Fortunately the bulk of the content I watch is not 4K. So it just means one additional adjustment before watching a 4K movie. With any luck, Apple will make that a Siri shortcut, since that's the only parameter that needs to be switched now: "Siri, switch to 1080p", "Switch to 4K", easy enough.