...As opposed to all of the next-generation game releases we have all played using Unreal Engine 5, such as the Fortnite Season 4, and the Matrix demo and... Fortnite Season 4 Chapter 2.
It is an issue that development may be just too hard to do it all in-house (...although no developer really does,) but what Epic Games is doing with UE5 isn't specifically original. Everybody making an engine is going in this direction of procedural assets and virtualized geometry and global illumination and what have you, using industry papers and delivered hardware features to experiment with what will eventually become standard practice. Epic got there first, true, because they've had the money and force of need to provide it, (and Epic can also use the huge network of third-party plug-in and tool providers and still say it's "in Unreal Engine",) but they're not necessarily lightyears ahead of everybody. UE5 was launched as a work in progress, and its main delivered executable outside of the Unreal Editor development tool has been the two Fortnite releases as well as the Matrix model city and short play bit (which was still a demo, and took 13 studios over a year to make.)
I mentioned in the State of Unreal Showcase thread
that our equilibrium was all shaken up by the May 2020 UE5 reveal (just 6 months before the console release) because we thought we were at the starting line of that next-gen quality, but the reality of the timeline was that the reveal was showing us the training stages that we usually don't see and that the actual tools (and availability to pro developers) was a ways off from starting; things would have been different too had the 2021 games like Horizon FW and Forspoken and maybe GoW come out as planned without COVID (though that would have left the actual 2022 crop looking even more dire, but maybe more ambitious productions would have fit into the schedule better had developer work management not gotten so complicated.)
I'm worried and frustrated about the state of games on these new consoles too (and I'm still not sure what to think of Forza, which seemed like a clear inflection point; I also don't know or trust what's going on with Avatar,) but I've tried to accept that, as I've said a few times, it's an unfortunate matter of timing that made this gen start so sucky. The features which would really make a difference weren't ready for the console launches, and unlike in the past where the brute force of massively more powerful hardware would power cool shit into existence, a lot of the emerging tech is accomplished more by studying physical properties and developing intricate simulation systems. You have more headroom and more runway with these new boxes, but it's still hard work that the computer can't do for you (...unless you literally have it do it for you, with procedural systems and ML trainers, but that's all got to get built by hand too before the computer can take over.