The display is putting out 4K.
PERIOD!
I'm not sure why people ask this question, I've heard it before over the years. Your TV is a 4K TV. For all 8 million pixels to show something, it means that the TV (or projector) must convert whatever is coming in, to the native resolution of the display. It means it MUST process any lower incoming formats to 4K. The video processing is a major factor of many purchases as a number of TVs don't do the best job in the world with their video processing.
All displays have some level of video processing which is applied/added to the incoming signal, and this is why reviewers spend so much time going through different displays and testing them. It's why reviews should be read.
There is no way for any display to show anything at all without something which converts the incoming HDMI signal to the format which specifically can be shown on that display. Along the way, it runs through the color settings of the TV, the contrast settings, the brightness settings, and anything else that is a part of that video processing, which may include creative frame interpolation, deblurring, and a lot more. When Sony goes up against LG, when LG is the manufacturer of both OLED panels, how is it that Sony can do better? They have better video processing!
So, what matters is the TV letting you know the incoming video signal. This matters because you can see if the Denon is actually doing the upconversion, or if that is being left to the TV entirely. But, even if the incoming signal is native 4K, it still must go through the video processing of the display.
Some devices don't need to do video processing. They can take the incoming HDMI signal and pass it on to the next device without changing it at all. Receivers have a bit of an issue as they can pass on video untouched, but to display on screen menus, it immediately requires that the video go through processing which adds the overlay of the volume or something else.
Is it better to use the internal upconversion of the Denon? I expect that that Denon does a good job with upconversion and likely does so with minimal image impact. It likely doesn't impart any color changes or utilize CFI or any advanced features. It just takes standard incoming video formats (480i, 720p, 1080i, 1080p, etc.) and converts them to 2160p and passes them on to the display. The display will then run that incoming 2160p video and ensure it is fully compatible with the display and make it look as good as it possibly can... always.
Certainly a major consideration is the quality of the source (like your cable box). Not just the fact that it isn't sending 4K video to begin with, but the reality that the quality of the source is FAR more dependent on the compression being used. A Blu-ray Disc carries data rates which exceed 20Mb/s. That's compressed, 24 frames per second, MP4 (HVEC typically), 2160p video.
When it leaves the Blu-ray player, it is no longer compressed. It is now uncompressed 4K/24 video and it is running at about 9Gb/s. Think about how much compression is being applied to video that is on the visibly best looking format there is... Then think about what your cable company is doing to the video when it can only operate at 10Mb/s or even lower data rates for their compressed video. Think about the quality of the cable box in use which must decompress the video from an incoming 10Mb/s stream to something that looks something like HD. Think about Netflix and other streaming services which operate, quite often, at even lower data rates.
Don't worry all that much about what your TV is doing to the image, but certainly you can A/B test what the Denon may be doing to the image with it's upconversion. I would bet that it does a much better job than whatever device is in front of it that is actually creating the image.
