It uses the Sega CD as a storage medium. The audio is playing through the Genesis.
If they could create a 700 MB cartridge, that's what it would sound like. None of the Sega CD hardware is being used.
The only thing holding them back is the price of large cartridge storage. This is 100% Sega Genesis audio.
To the best of my knowledge, you're incorrect. The Pier Solar CD is streaming samples real time through the Sega CD sound hardware. the clues are the way the music is stored in the disc and the meter in the sound test. The Pier Solar soundtrack is a full 3 discs (ignoring the remix disc). If that was all FM algorithm enhanced info, it could have been squeezed onto a one step up cart (say 72Megabits, still theoretically possible). The CD wouldn't have been necessary. Nor is it wave files. Even compresses the soundtrack would have been too big to fit on a single CD (with room to spare, I might add). The soundtest illustrates that when the CD music is active it's using the 8 PCM channels that the Sega CD had vs the 6 FM and 3 PSG channels the Genesis had. On the disc the music is about 200MB which for the sample sizes and size of soundtrack is about right...its pretty comparable to Lunar: Eternal Blue, except Pier Solar is in Stereo.
As for Pier Solar's FM version of its OST...honestly its pretty good.
I shake my head at the vehement hatred of the Genesis sound capabilities. the Yamaha chip was chosen for a reason...the vast majority of the arcade games of the time used FM synth, and the Genesis, because it used similar hardware ended up sounding pretty close. Sure it wasn't perfect ($200 in 1988/89 versus $1000+ arcade machine), but you got a decent facimile...and once in a while you even got something some people consider better:
Vapor Trail for example (one of the best FM lead guitar sounds I've heard, and I'm pretty picky about electric guitar sounds. Most of them both on Genesis or SNES suck. Vapor Trail, Thunder Force IV, Rock n Roll Racing and Battletoads-Double Dragon are the best ones in my opinion).
Aracde:
https://www.youtube.com/watch?v=AVMIPLX7IGI
Genesis:
https://www.youtube.com/watch?v=4mxdZz7tGhI
That having been said Uncle Rupee asked what games compare in depth and instrumentation. He even dismisses Streets of Rage out of hand (which is hilarious...most SNES fanboys usually acknowledge those games at least) but we'll humor him here.
I'm not going to post examples because I'm considering full soundtracks. Youtube has all of what you need for the most part.
For Castlevania IV, I'd compare it to Shinobi III. While a number of differences both soundtracks have a measure of jazz overtones infused into them. CV4 is a more ambient combo jazz, whereas Shinobi III is more fusion. I'm more apologetic for CV 4 in general (I think its a perfectly fine game), and I really do like its OST (its one of my favorites, I think Konami outdid themselves on that one)...still I think Shinobi III compares favorably to it.
I'll skip Mega Man X because A) I'm not that familiar with the game or its soundtrack and B) I assume its uptempo rock which is something the Genesis is generally felt to excel at. i could be mistaken, but again A)...
Final Fantasy 3...Its a great OST, nobody reasonable says otherwise. Still, I'd actually put Shining Force II against it. Where FF 3 is mostly orchestral (Yes, there's some diversity in styles there for thematic purposes), Shining Force II is more like a military wind band (flutes and very heavy brass). Generally fitting the overall genre of a Strategy RPG and the semi-militaristic trappings of your group. That isn't to say there isn't diversity in the settings. There are various themes befitting locations both in and out of battle. FF3 is a bit more expansive, but SF II is definitely more kinetic (you spend longer "in battle.") I'll grant you I'd prefer FF3 in this case (personal preference), but I feel SF II compares favorably.
Chrono Trigger - Again I'll grant you its a great soundtrack...but so is Phantasy Star IV's soundtrack. In context of the game, the use of the more synthy elements works due to the sci-fi nature of the game. Still, its an RPG and in context there need to be tracks to represent towns, dungeons, battles, narration, ect. PS IV delivers with a memorable soundtrack.
Secret of Mana. this one is interetsing. The composer on this one did legwork that most of the others on the SNES didn't do and tried to tweak the drivers and change up the samples, so there were some unique sounds in this game. Against that I'd put Sword of Vermillion. Many people deride the game (I'm not one of them I've replayed this game multiple times)...but nobody derides the soundtrack. From the opening theme with its orchestra hits (why do people forget the base Genesis can do PCM playback on channel 6?), to the destruction of Excalibria, to the Death of Blade, the exploration of the lands, battling the monsters, to the Last City, to the confrontation with king Tsarkon and the closing credits. This OST is a true masterpiece.
For Actraiser...one Koshiro OST deserves another...Revenge of Shinobi (see, no Streets of Rage

). With Actraiser Koshiro makes a decent stab at orchestral works (he has admitted that he wasn't very versed in orchestarl music at the time...that having been said, I'd say he did a decent job with it.) I feel Revenge is a better, more diverse soundtrack with tracks leaning from dance, to rock, to jazz, and even a bit of atonal (final labyrinth level).
Finally, I'll have to abstain from Tales of Phantasia...I'm honestly not familiar with that soundtrack either...though again, its very annoying that people forget that channel 6 can double as a PCM channel. Its technically possible to have a music track that has vocals and utilizing the other channels as their respective FM or PSG. no one ever bothered to do it, because such a thing was way easier on Sega CD.