I think the PS5 IO is the real deal, but will devs use it? Doubtful to say the least. The Matrix demo uses 300 MBps. PS5's 5.5 GBps is overkill for UE5, but this is where their first party studios can come in and design the game around the PS5 IO. It might not push visuals better than PC, but it has the potential to redefine game design for sure.
The Superman gif i posted above shows how fast Superman can fly around the matrix city. It is really fast. Especially when you do the initial boost, but what Cerny showed in the spiderman ssd demo is way faster.
The question is who will utilize it? Sony devs pretty much, and they are being forced to port their games to PC which could mean they might not fully utilize the PS5 IO in order to ensure they can port it. We've already seen Ratchet not even come close to maxing out the 5.5 GBps speeds of the SSD.
But if devs sit down and really think about changing game design, the potential is limitless. We can finally have Christopher Nolan style scenes where you have dreams within dreams following multiple characters at once in different places. We can have insanely fast traversal like what you see above. A true flash game or a true superman game with no limitations could be possible. Or devs can go all Doctor Strange on us and breakdown entire worlds on top of us and throw us in parallel universes at the drop of a hat.
But will they? I dont think so. Sony devs are good at combat. Great at storytelling. Exceptional at visuals, but i dont see them particularly innovative or great level designers. They will make a great traditional game, but can they innovate and shake up game design like you said? I have my doubts.
The fact that its been three years since that Spiderman gif was released and we have seen ZERO fucking games utilizing the PS5 IO for fast traversal just tells me that they arent going to do much with the PS5 IO. However, that doesnt mean the PS5 IO/SSD isnt magical or game changing.