AV1 playback works on devices that support it. You'll need server-side transcoding for devices that don't. Jellyfin can do this by shelling out to FFMPEG, which can optionally use hardware accelerated codecs if they're available to it. So basically, "it depends", but Jellyfin itself supports AV1 media.

This is obviously useful in general, but i rely on it to run a media server on my low-end minipc with Intel Quick Sync.