Ok, so I connected it to the other TV which supports Dolby Vision and Dolby Atmos
Here is the update
1. Though my TV supports Dolby Vision and I have enhanced HDMI enabled. It shows content maximum with HDR. That too when I set Realme stick DEFAULT Res to 1080p 60 or less.
If I set to 4k60, it doesn't play in HDR with any of the apps.
Its connected directly on same HDMI port where Apple TV 4K box was connected and was showing both Dolby Vision and Atmos without any issues.
In setting, it shows Dolby Vision not supported on tv
2. Also its not playing any supported content in Dolby Atmos too (except Apple tv+ app), maximum it shows Dolby Digital 5.1 in other apps like Netflix
TV settings are enabled for Dolby Atmos and are same where Apple TV 4K box was working fine with all apps supporting Dolby Atmos
There is no specific settings in Realme stick for enabling Dolby Atmos
But yes its sending output of Dolby 5.1 to Onkyo for other apps
Netflix: (notice now its showing 5.1 label also which was missing in other TV) Netflix doesn't play in Dolby Vision. Only 1080p HDR with 5.1 or 4K with 5.1
Apple TV+: Only Apple tv+ sending output of Dolby Atmos but Dolby Vision isn't available.
Content playing only in 4k or 1080p hdr with Dolby Atmos
Prime Video: Even default resolution is 1080p, Prime video shows in 4k with HDR and 5.1.
No Dolby Atmos content available in Prime video
Hotstar: only showing HDR with 5.1 label. Resolution is limited to 1080p for known 4k content even when default resolution is 4k60 in stick
FYI MULAN is available in 4k, HDR and Dolby Vision with 5.1
I think future updates may resolve these incompatibilities