No no, it runs the game in UE5 container with basic UE5 lighting what I mean is the current stuff with Nanite, Lumen, Cahso destruction and Niagara effects, cloth deformation, new animations and so on.
Digital Foundry has a video that has the Steam Deck running Fortnite with nanite and lumen and getting 30 fps after the upscale and they had to do a lot of stuff to get the game running and the software lumen was bugged so they had to use hardware lumen. A version targeting Switch 2 shouldn't have any problem running.
UE5 is heavy and I'd expect it to have necessary compromises on Switch but you should be able to use most of the feature set.