In terms of raw power only its CPU is better than X, but everything is on newer and more efficient architecture. It means that games optimised for it will be better but it will run unoptimised games worse.
Yes I think a lot of third parties will just lower and lower resolution, texture quality and things like that until it runs well. They won't bother with any serious optimisation, especially if series S sells worse than expected. It'll lead to a lot of series S games not looking good.
kind of like the current xbox one s..