This makes sense. HDMI cables are only rated by bandwidth (standard, high-speed, premium high-speed, ultra-high-speed), the HDMI standards (1.4, 2.0, 2.1) determine what features the devices support and ultimately the negotiation is about what both devices can support given the available bandwidth of the cable. It's probably a lot better now than it used to be, hence the weird flickery thing mostly being a thing of the past.
The DVI thing is interesting, this may explain why Xbox can output 1440p which is a HDMI supported resolution but not a standard one for TVs. Not that this is a good reason for PS5 not to support it because not everybody games on a TV. My previous Bravia X-Series supported 1440p input from my PC at 60Hz right until a firmware update when it didn't anymore. It seems like a weird thing to remove.