Okay, I figured it out
1. If you have a song already downloaded offline as Hi-Ress Lossless, it will always show that when you play that song
2. If you don’t have the song downloaded offline but are streaming over the internet, Apple Music intelligently selects the highest quality your AirPods can support.
3. If you stream a song to the HomePods, the song is not going from your phone, but being streamed directly by the HomePods, so it is limited to Lossless only