This thread talks about it pretty extensively:

It appears to be a problem with the LG CX. Some users have reported setting Digital Sound Out to Auto instead of Passthrough and getting Multichannel PCM 5.1. Although the Auto setting would take away your ability to get Dolby Atmos audio.

I have an LG as well, and I agree that setting it to Auto instead of Passthrough will give you the correct 5.1, it also gives you Atmos from the ATV.  What I find interesting though is that there is a very different use of the speakers when watching on the ATV vs the Apps from the TV itself.  For instance, in watching For all of Man Kind, the end of the intro is extremely loud from the rears when watching on the ATV, while the sound is moved to the Arc when we watch from the TV App.  I am sure there are other examples, but we have set the ATV to output DD 5.1 and use the TV App for all content that is in Atmos until the LCPM issue is fixed by Sonos.

“ … until the LCPM issue is fixed by Sonos.”

What LCPM are you referring to?  I thought this was an LG issue, not a Sonos issue?  Please explain.  Thank you.

I am not as knowledgeable as many on this forum, but have had my Arc since before the LCPM was added in an update.  LCPM was an anticipated update for those of us who stream through an ATV, but the mixing of the channels did not work correctly from the beginning, and not just with LG’s.  Sonos have stated they are working on a fix, which was initially scheduled for July (I think), but they have since stated they do not have a timeline to share.