Counter-question: Why would I believe that there are not corporations out there greedy for attention in delivering "true next-gen" experiences in this competitive market right now if they were ready to do so?
Already there are games being made for PS5 and Xbox Series and PC
and Switch but not PS4 and X1 because those markets are stagnant. Active gamers are on these new consoles, even with console shortages; with major franchises, there's still a base that is buying the yearly edition, but if you have a new product, there's a good marketing strategy to betting on the 40mil brand new consoles out there than the 200mil old Xb/PS consoles which are mostly collecting dust. (For example, Horizon Forbidden West was something like 70/30% PS5 sales, despite PS4 version being cheaper and quietly being a steal thanks to the free upgrade.) Granted, PS4 and One have been adding to the coffers in this most unusual console generation, but the idea that these older boxes are the only thing keeping game designers in business right now and that they're desperately clinging to the past to stay afloat is not the case.
So, yes, obviously these consoles are capable of The Matrix Awakens levels of fidelity. You can play The Matrix Awakens on these consoles. You can also see the limitations and early experimental quality of the engine in The Matrix Awakens, with its replication and procedural asset modification tools getting the most out of its current abilities, while also flipping back to traditional methods either on specific types of objects or (in the case of cars) live on the fly in gameplay. This was a perfect demo for their technology as it exists right now, emphasizing the strengths of Nanite/Lumen/Niagara/Chaos while keeping the current/existing weaknesses at a minimum.
Matrix Awakens took well over a year to make and
over a dozen studios working on the tech and assets and optimization, all so that it could offer gamers 5 minutes of "gameplay" and then a sandbox to drive/walk around in. Duct tape and bubblegum are what tech demos are made of, and Matrix Awakens has
really great duct tape and bubblegum, but you need sterner stuff to make an actual game.
You can lean more about some of the tricks and techniques used in making The Matrix Awakens (most of which would be used in making a "real" game, but the project's scope had to be limited just to get to this point of being able to deliver 5-minutes-play / 16 km2-sandbox from the tech deep-dive (although it is a
deep deep-dive, so take it at your own pace.)
...BTW, yes, Sony and NVIDIA and others were introducing tech in the vein of Nanite a few years earlier than UE5 and some even beyond, but ask yourself: would Matrix Awakens have existed if anybody could have done it by now?
Would Epic have committed to this demo, for over a year of production across a number of partner studios, in a franchise it does not own and will not be able to expand upon, to deliver a tech demo which was built entirely on the premise of "Holy shit, now THIS is next-gen...", with little gameplay and no monetization (aside from the partnership of the licensee, however that money worked out,) just the promise of good word-of-mouth for its engine and these new consoles, all of that work... would they have done
all that if they honestly thought somebody might have
beat them to market by their deadline of December 2021?
No, even with UE5 Early Access already out there and the consoles being a year old by then, Epic knew they had hot shit which was ahead of its time. Matrix Awakens is of its era, but reality is still taking time to catch up to its promise.