I had this same issue, and came for an answer. When I, according to macOS Monterey, scaled down, I actually didn't decrease the resolution. It just made the UI bigger. To make sure of this, I went to the monitor I'm using and checked what input it is getting from the Mac, and sure enough, I was getting 4K res, even though I had 'scaled down'. I don't know if this was an issue before, but at least now with the latest update, it is totally fine. And I did squint at the display and tried with YouTube, and it sure looks very much 4K.

I went to the monitor I'm using and checked what input it is getting from the Mac after scaling down. It showed that I was still getting 4K resolution. So even if you choose the options that say lower resolution, the display resolution is not being changed.