This claim was made amout series X games too but so far owning my series x, I have not had one single game not work running off of my external harddrive. The xbox has the expansion SSD ready for purchase but for now I have no use for it. I use the SSD for higher end or more frequent games for now but that is it. If it does become SSD only, my new games will sit there and older stuff on external. Curious where this goes.
Also on xbox you can uninstall and still have the game to pick back up later but of course that is inconvenient due to having to download again and in the age of capped GB internet, downloading the same game a few times might force you to overpay for your internet.
I have tested it on multiple games. You can only play PS4 games from the extended drive. It won't even let you transfer PS4 games onto the SSD. I knew that wasn't the case with the Xbox Series X because my buddy has been doing it. I actually never heard that about the Xbox Series X. However, there have been a couple games with "free" PS5 upgrades. It then downloads the PS5 version onto the console. In addition, I did pay $5 bucks for another game upgrade to the PS5 and again, it downloads the game onto the console and it works. However, my other PS4 games cannot be transferred to the SSD and are only playable from my extended drive.
By the way I can't say enough about the PS5 controller. I will tell you that the PS5 controller FINALLY supplanted the XBOX Controller which has been my favorite since the original XBOX. The PS5 controller is simply the most amazing controller I have ever used.
I will pick up the XBOX in a couple months when things die down. It was ridiculously hard to get my hands on the PS5. I don't have the energy to do it again right now.