You are in a bit of a pickle.The Apple TV 4K converts everything to LPCM. So multichannel tracks converted to LPCM will require eARC bandwidth. The TV and receiver support the limited bandwidth of ARC. The two channel signals will work but not anything more.
Down Converting to Dolby Digital 5.1 in the Apple TV 4K should have worked. Check the HDMI input and sound output of the TV. It may not be set at Passthrough and could be set at Auto or PCM which would result in even more conversions before output over ARC to the receiver.
Even with an optical connection from the TV to the receiver, the Apple TV 4K remote controller can be configured to control the volume of the receiver using IR by going into Settings>Remotes and Devices>Volume Control>Receiver via IR.
The ARC spec does support lossy Atmos/DD+ 7.1 while optical just lossy DD 5.1. But, the Apple TV 4K does NOT bitstream audio and automatically converts LPCM. For those with older receivers without 4K and eARC, the Apple TV 4K will be difficult to incorporate into the system when setting up a direct connection to the TV.
New TVs that support eARC are not equal in their implementation of it and a direct connection of a device to any of these TVs can be a nightmare based on a few settings. When connecting an eARC capable TV to an ARC capable receiver, eARC must be turn OFF in the TV so that only the limited bandwidth signals of ARC are sent to the receiver.
While eARC can work with HDMI-CEC turned OFF in both the TV and receiver, HDMI-CEC must be turned ON when using ARC.