[0] edit: that's incorrect, L4 and L5 are primarily defined by differences in geography range.
However, in terms of technology, level 5 is a big step up.
Consider for instance that a level 4 system can assume that the ground is purely flat (an assumption that Tesla’s FSD vector space makes), while a level 5 system needs 3D information to navigate some vertically-diverse terrain.
Which is exactly GC's point – they don't want a car that can drive itself in Phoenix and SF and that's it. Most people either want a car that can make their life easier for a huge portion of driving but still require them to be in the driver's seat (e.g. Tesla's Autopilot) or a car that can actually drive itself basically anywhere (e.g. Tesla's FSD). Waymo's Level 4 just isn't that appealing for a personal vehicle.
This is why the SAE level system is poorly thought out and not particularly useful for anything except arguing over minutiae.
It isn't clear how Tesla goes from "FSD" to "full automation". They are working on the "draw the rest of the owl" step.
Meanwhile, for Waymo to jump from level 4 to level 5 requires handling edge cases which it is actually not clear can be handled by the system Waymo has built. In huge swathes of the world, weather conditions are not conducive a system that relies heavily on LIDAR / roads change too much to be effectively mapped like they've done in very stable metropolitan areas like Phoenix and SF / etc.
Said another way: our existing roads are built for entirely visual agents (humans). Getting a system that heavily relies on non-visual sensing (e.g. LIDAR/Radar) to work well on a specific subset of those roads is clearly doable, but that doesn't mean it can be generalized to our entire automobile infrastructure.