Yes but when you talk about a single player game in regard to physics and lighting you're describing what xCloud instances doThere are things consoles can't do yet now, due to the limitations.
The cloud could handle those things.
This is about
"concurrent scale for players and make that more engaging? How can we have more players in a space than we’ve ever seen before?’"
This is metaverse stuff. They aren't going to make single player cloud games that do what xCloud or your local console does with better physics and graphics.