For your first question, the answer is it will only decode MQA coded files, other formats will just bypass MQA and do normal DAC conversion at the frequency of the file.
With respect to your second question, I didn’t understand what you where asking, but be careful as the IIS input of the X16 is not an HDMI format, it just uses the HDMI connector, but I seriously doubt the PlayStation 5 will have a IIS output, it will be a HDMI not IIS. Same connector different pin out, they are not compatible. IIS through a HDMI connector is not standardized either so even between different manufacturers, they might have different pin outs, and will not be compatible, that is why they include the pin out on the manuals so you can check and modify the cable if needed.