Yes, I would connect the Sonos Arc via ARC. That gives you full volume control via ARC from the TV, rather than via IR directly to the PLAYBAR. It also would enable the ability to carry Dolby Digital Plus, if the TV supports that, which is one way Atmos is carried. 

I don’t have an NVIDIA Shield to have any suggestions on the settings for it. 

Nvidia Shield → TV hdmi

TV → soundbar hdmi arc.

The shield should auto detect the supported video and audio formats. Enable Bravia Sync on the TV and hdmi-cec on the Nvidia Shield, It will give you power on/off, tv auto input switching and Sonos volume control with the Nvidia shield remote.

The shield has some extra options for what is allowed via hdmi-cec, so you can selectively enable/disable different features, rather and just an all hdmi-cec features enabled/disabled.

Depending of the software you use on the shield you may have additional audio options to enable decoding/transcoding of unsupported audio formats and/or enabling bit-streaming. The last time I used Kodi for example it didn’t enable TrueHD/DTS-HD or bit-streaming by default regardless of whether arc or eArc is used.

With apps for the main streaming providers it is a non-issue as they don’t use the lossless codecs or DTS.

Thanks for your help.

I suppose the crucial thing is what format does my tv passthrough...

Pretty much. In terms of potential formats optical and hdmi-arc will provide the same support, but if you want to play something with DTS, for example, and your TV doesn’t support DTS passthrough, then optical would be the way to go.