Or you could use a 4K stream from Netflix (only available to premium premium subs) and encode it down to HD and likely get a better image.
This is absolutely true for all the streaming platforms. My Jellyfin/Plex servers with pirated content are set up in a fairly ridiculous way: I use sshfs across multiple seed boxes located on different continents to "merge" the filesystems in a way that is transparent-enough to Jellyfin that one server will serve up all the content.
Even with this somewhat-absurd daisy-chaining, I can serve much higher bitrates to my home than Amazon, Disney, Netflix, Hulu, etc. The encoding quality is much better and even completely video-naive guests who know nothing about technology notice the difference and comment "Wow, the picture quality is so good!", especially with anything like Dune 2 or Planet Earth. Even when the video gets transcoded on the fly for device-compatibility, while it's degraded, it ends up still being better visual quality than the major streaming services.
The streaming platforms are definitely optimizing for minimizing their costs rather than serving decent bitrates that the user-agent can handle.
If you really care about visual quality, I do reccomend trying to get a membership to PassThePopcorn, or rip content from BluRays yourself, which you can rent from libraries. Ripping is really not much effort once you learn enough to do it once or twice.
I'll start using the major streaming services again when I can actually receive not-mangled visual quality from them.
Added to that, you can comfortably overload an ISP's peering and send infrastructure costs rocketing.
Practicalities, things might work on an individual scale, but when you have millions upon millions of users, it creates problems.
Whether it's because Netflix locks the good high-bitrate encodes to the most expensive subscription plans many people aren't on, or because their "Roku 4K" or "Fire TV 4K" or whatever is actually negotiating the 1080p-H.264-low-bitrate stream, or because their internet connection latency was auto-detected too low, or their device doesn't have enough memory to buffer nicely or whatever.
I bet Netflix is absolutely capable of delivering something really nice. But in my experience, Netflix quality as delivered looks about on-par with "YouTube free 1080p" -- so much so, that even plugging in a 1080p-only-Blu-Ray, is a huge improvement even non-techie folks can notice.
I‘d choose the blu-ray any day.
Even if you look at torrent content, you can find a given movie anywhere from a few gb (1080p) to a few dozen gb in size at 4k with higher relative throughput and quality. Not to mention the encoder settings.
Personally, I don't go for the highest quality encodes because I don't see the difference well enough. I tend to favor x265 over x264 only because the blur degredation is less annoying than blotchiness imo.
When you are streaming, the level of encoding will swap out, even at the same resolution a number of times depending on what you're getting. You may well do better with a 1080p stream over a 4k stream depending on your screen and device's upscaling behavior. 4k takes at least 4x the bandwidth, and has tighter latency needs. There are others that can go over this and explain it much better than I can, but it's not malicious, it's partly cost sure, but it's also a matter of what your connection can handle.
Edit: Netflix changed this sometime in the past half years: https://help.netflix.com/en/node/30081
The optimistic take here is that the purpose of this encoding work is to make Netflix accessible consumers in ALL countries- not consumers with beefy internet.
IMO the realistic take is that Netflix knows it can do this while saving $$$ serving lower quality video to consumers who cant tell the difference.