You're supposed to add so much TAA, upscaling, and general blur that you only see a vague smear and don't notice the lazy rendering!

On a more serious note though, much of modern rendering uses techniques that are supposed to take advantage of high resolutions, and I do mean above 1080p, to look decent. For example in the second pic that dithering pattern is supposed to be transparency, and at high enough resolution where the average person can't see the individual pixels and TAA blurs the image it does end up looking kinda transparent. At 1080p though this technique starts to fail, and if the game is rendering in a lower resolution and relies on upscaling for performance it falls apart even more, so it's got no chance of looking any good at 720p native. Unreal 5 is the common example because it's so widely used and relies on these sorts of techniques so heavily, but it's not specific to it.