If my screen is already at 100% brightness then there's no HDR effect. 100% brightness is true 100% brightness, the max capability of my backlight.
The only difference is that if my screen is at less than 100% brightness, the HDR content can be brighter than the rest of the screen because it has the headroom.
Does that make sense?
Also, per later comments, this feature only kicks in when you're actually viewing SDR content, so there's no downside (even contrast) in everyday use.
But it seems like Apple might be gradually moving from 8-bit to 10-bit displays. They don't really advertise it clearly, but if the technical specifications say "millions of colors" it means 8-bit, if they say "billions of colors" it means 10-bit. (256^3 vs 1024^3.)
So if you've got the iMac model with the 4K screen, it's 10-bit and therefore capable of 1,024 levels of color. So remapping the UX to e.g. 512 will still be fine, assuming (safely, I think?) the compositing is all done using 10-bit color.