If you're unfamiliar with computer graphics it's unhelpful to try to nitpick and just end up being incorrect. Antialiasing is not downscaling, and less data is never going to beat more data for visual fidelity.
> less data is never going to beat more data for visual fidelity
It has less data but better processing. That can look better sometimes.
Except it doesn't strictly have less data. It has multiple frames and other information to work with.
Of course if you set the internal resolution to 720p it's going to look bad, but there are cases where DLSS quite literally beats native when the internal resolution is close enough. And TXAA when implemented right is just 100% an improvement over non-TXAA in every case I've ever seen.
(I group TXAA and DLSS together because, generally speaking, they are the same sort of thing)
That's what makes ray tracing not an attractive proposition at the moment. Once it will become usable without upscaling, then it will be interesting.