Be mindful that these are all buzzwords for both the PS5 and this Xbox. The plus side is is slight under a high end PC. I would expect most games could run 1080p or 1440p at 60fps, and some 4K 60fps depending on the engine; you're not hitting 120 FPS though, full stop. The 8k will most likely be an "upscale" type nonsense just so they can say 8k every 11 seconds.
8K and 120Hz will be thrown around a lot this coming generation, but all that means, I believe, is HDMI 2.1 display output support. Grabbing a snippet from the Games Subreddit.
While buzzwords like 8K and 120 Hz sound either mindblowing or misleading, depending on who you're asking, there are many good things to come out of both Project Scarlett and the next PlayStation supporting HDMI 2.1.
Just quickly on 8K, it's entirely possible that 8K technology will decrease in price as drastically as 4K has over the last 7 years. At the very least, Project Scarlett and the next PlayStation should be capable of doing things like outputting the system UI at 8K, or 8K media playback (assuming things like video codecs and/or DRM don't get in the way in future).
The big advantage of having HDMI 2.1, discarding the established buzzwords, is better support for more advanced secondary features at resolutions that are already popular like 1080p and 4K. The extra bandwidth of HDMI 2.1 will enable full HDR10 support for resolutions like 4K at higher refresh rates without needing to resort to chroma subsampling which can reduce the clarity of things like text. 4:2:2 chroma subsampling is required in order to do HDR10 at 4K/60 with HDMI 2.0b, but with HDMI 2.1, HDR10 is supported with full chroma intact all the way up to and including 144 Hz. At lower resolutions like 1080p and 1440p, HDR10 will have full chroma sampling at 240 Hz.
HDMI 2.1 also supports features such as Dynamic HDR (HDR grading that changes frame-by-frame), eARC (allows for full Dolby Atmos over an audio return channel link), DSC (display stream compression for higher resolution and refresh rate content), and full HDMI standard variable refresh rate support (FreeSync over HDMI is currently a bit of a hack). In my opinion, it's these advantages that are going to be more noticeable to the vast majority of users over the next few years.