iTunes movies/tv/music library permanently on external SSD? HD/4K, Dolby?

[MiniApple]

first time MacOS user soon, switching from Windows10

Setup:
M1 Mac Mini
External 2TB SSD connected with USB-C

1. as far as I am aware iTunes movies and tv episodes are saved in HD 1080p only when downloaded locally, even if you have bought 4K versions. Is this still the case?
2. Will the sound quality, if available, be at least 5.1 surround or better (7.1; Dolby) or is that downgraded to stereo?
3. Can I have my iTunes tv/movie/music library permanently externally on the SSD?
   If so, what do I need to do, once I get my factory fresh Mac?

Thanks