Also c1 is set to passthrough 

What exact content are you testing? What are the audio settings on the Xbox currently set to?

Dolby atmos-xbox series X

disney plus 

Rogue one 

When playing either the native TV apps or Xbox Series X does the now playing screen on the Sonos app show Dolby Atmos?

On the native apps it says (Dolby atmos dd+) on Xbox series X it says Dolby atmos 

On the Xbox, is HDMI Audio set to Bitstream Out? Is Bitstream Format set to Dolby Atmos for home theater?

Bitstream out doesn’t appear to be an option. It is set to Dolby atmos. It says dolby atmos on the Xbox 

Send a screenshot of the Volume & Audio Output screen under the General settings.

Here it is 

I have it muted but I don’t think it matters

Send a screenshot of the Volume & Audio Output screen under the General settings on the Xbox, not the Sonos app.

Here it is 

I think the reason why the audio is louder when streaming from the Xbox is because the Xbox uses a Dolby MAT encoder to play Dolby Atmos audio. When you stream from the TV’s native apps, the TV passes through the original audio to the Arc untouched.

If you select the Allow Passthrough option on the Xbox, do you notice any difference? Does the audio sound more similar to what you hear when streaming from the TV’s native apps?

To ander

If you are getting Dolby Atmos vs Dolby Digital Plus the former will deliver a better listening experience.

Click here for information that explains the differences.

It just turns off the audio when I set to passthrough for some reason 

So is Dolby mat better or worse? 

It depends on the user and which sounds better to your ears. You are still getting Dolby Atmos audio when playing a Dolby Atmos source on the Xbox. IMO, the only time it could be worse is when the Xbox up mixes non-Atmos content to Atmos. But some users don’t mind this upmixing.