It is absolutely coming from low-rez model with it getting worse with increasing scaling. It basically blurs all organic detail then tries to make smooth sharp continuous cartoon edges for what it thinks is important detail.
For some things that is exactly the low-rez result that you want. Suppose you have a classic window with a diamond pattern on it, it does a great job making them nice straight lines on a smooth window even if it was badly compressed and noisy, whereas standard makes it very organic mess depending how much you play with deblur/denoise/dejpg. So it is very much needed as an alternate AI
The problem is with nature photos it is going to hallicunate and connect the dots (which are actually pixelated natural textures) into these strings in a awful attempt at being cartoon sharp edges smooth elsewhere. Thin streaky white things that look like white grass on the rock but obviously that makes no sense not even lichen look like that, cartoon black rock crack that sticks out badly, streaky grass shadows with no texture when that is actually organic streaks in the rock pattern itself, log is completely posterized.
This is a fair use transform of a photo copyright from devenpsc, I leave it to them to provide source.
low-rez
0 supress noise (aka denoise)
100 remove blur, (aka deblur)
no remove compression option (aka dejpg)
standard
0 supress noise (aka denoise)
100 remove blur, (aka deblur)
100 remove compress (aka dejpg)
the only strings is grass, the jpeg mess is cleaned up for smooth edges, but the rock and wood are proper rock and wood textures. The only strings are arguably grass and wood cracks, maybe a few near rock edge is confused by jpeg watercolor bleed noise or maybe that is just fine grass/weeds
Side discussion but devenspc also has a bug for patchy blur/details and I think it conspires with these different ai goals. depth buffer blur also behaves differently between the two ai
deblur pushed up on standard is pushing the blur out to only the depth confusion where rocks/grass meet, lessen deblur it starts blurring more into the rock extending the depth mask from the grass. It is actually getting the depth mask wrong as it has no concept of front or back grass as I think it relies on bright/detailed dim/blurred to clue the depth mask and not really true depth plan object sorting.
low-rez wants to bring out all those white highlites with streaky connected hallucinated as a cartoon foreground, and smooth the gray parts of the rock into a blurry background - classic cartoon tricks to pop 3D out of 2D so that conspires with the depth mask. those strings on rock must be front, that gray blur must be back.
I think neither is really fixable without the intended target of each AI being degraded.
You do not want to fix low-rez to let the dimmer details in and not connect the dots to prevent the posterized cartoon because you need that to make a patterned window panes work
Interestingly auto got worse in 1.3.2 standard was more prefferred, whereas 1.3.4 low-rez was more preferred and I think it is because 1.3.4 has moved more to wanting blurryness to avoid artifacts but low-rez likes the blur as it makes it easier to connect the dots.
Now you might just say why not just let user do standard all or low-rez all knowing the image content since auto seems to have a problem (and even then it cannot know what is artistic intent - maybe you want that cell-shaded posterized look on nature) The problem is you cannot do that in photo as it has copy settings to all , when all you want to do is set the AI model on selected images and let it pick the model parameters - and no way will you do that manually on a large batch image set. So you are reliant on AI to pick the model. You can do that with gigapixel because of its spreadsheet UI option (and I just posted an enhancement request for photo to have that)