Yes, it's better to own the original hardware. The fact that MS worked to even ADD backwards compatibility to Xbox One after launch is admirable in and of itself. Especially after their botched launch with "always on DRM."
They basically had to build an Xbox 360 onto an Xbox One,
two different architectures running in tandem.
It's limited because developers and publishers have to agree to the BC program.
That's ... the idea. Like PlayStation Now, it's a streaming subscription service akin to Netflix or Hulu. You pay to stream or "rent" games on the services. Game Pass Ultimate has the advantage of streaming select games on devices AND the EA Play subscription included with it.
It's an option and you still have the ability to purchase the game outright.
Personally, I find the aspect of streaming video games to be next generation.