I had the same dilemma. But I chose to set everything to limited/low so that there would be no question of compatibility.

There are basically three scenarios you can get:

Auto works well with all current gen consoles. The Switch will default to Full when on auto. The PS5 is more complicated and you should stick to auto. In its default mode, it outputs RGB Full at 60Hz but when it switches to 120Hz, it starts outputing YCbCr422, which is always Limited regardless of the RGB range setting on the PS5.

The choice between Full or Limited doesn't affect HDR content. Most TV shows and movies are encoded in Limited range. PC and consoles generally default to Full, except in some cases.

Sir, I know this was a comment from 2 years ago but, I have one question:

What is the difference in picture quality between full/full and limited/limited? Why even bother if both are the same? Or aren't they? Is full range better in color for games?

I have some trouble understanding this because in the past basically TVs and Consoles used limited everywhere, so why are consoles now defaulting to full in their auto setting? Isn't this a problem for older TVs (like mine) that default their picture setting to black level low (aka limited)?

Please answer this because I've seen SO MANY VIDEOS and READ SO MANY POSTS and none of them explain this clearly. Thank you so much.

I've seen reports of the game looking washed out or having a cloud like effect on the entire image while using full, and then looking good on limited

If the tv and the console are set to full/pc rgb, it will look correct, provided the display supports it. This gets tricky with PS5. It only does full/pc rgb at 60hz or below. If you leave it on auto for the console, as soon as you boot a 120hz title, the console and display can miscommunicate. It happens on my Sony A95L, which is a new display. I leave the PS5 set to limited for this reason. This isn't an issue with HDMI cables. The same happens on my LG C1 with PS5.

It's worth noting that you really aren't losing anything by using full or limited. They are just two different ways of expressing the final output. As long as the display chain is set up correctly and the display properly supports both formats, it will look the same. It's also worth mentioning that televisions are internally calibrated for use with ycbcr/limited. RGB can be converted to ycbcr. Ycbcr is not converted to RGB. HDR is also natively represented in Limited.

Sorry, this post isn't the most cohesive. Just wanted to lay down some of the bigger points.

(I don't recommend PC Mode for gaming on LG displays with current firmware. The advantages it had are gone with current firmware. PC Mode is only useful for 1:1 pixel mapped text on desktop use. Games don't have 1:1 pixel text, negating the need entirely unless you sit 2 feet away from a giant display.)

Use auto, forcing one or the other can cause issues in some games and can result in washed out colors. I have however had to change when the console doesn't automatically choose the correct one

Limited on the ps5/cx looks better than full to me. Full just seems washed out.

I have a LG CX77 and Xbox series X plugged directly into the CX. I put the input in PC mode and use full RGB on the Xbox for games. Games are usually mastered in RGB full where as movies and TV are limited. I only use the Xbox for games. I have a dedicated blu ray player to a different input and stream everything else. The Xbox looks amazing!

Before I had this setup I had to use limited with the Xbox One X and Sony TV it looked far better that way. Crushed blacks for sure. That's my personal experience with using both. The washed out pictures sound like incorrect black level matching which is something different. I always leave the black level at Auto.

Limited (16-235) to get a proper black level match.

If your TV supports full range then use full range on your consoles that also support it. If you change it and it looks different, then it means that your display doesn't support that range