w5jck and Gator – that's what I'd always thought, but I went ahead and tried it, and it looks like it's more complicated than that.
On the current versions of macOS, iOS and iPadOS, turning on "iCloud Photos" is equivalent to turning on what was previously called "iCloud Photo Library," meaning your entire library is uploaded, stored and synced using iCloud, and not necessarily stored at full quality on your devices. However, there have always been other features that use iCloud, such as My Photo Stream and Shared Albums, and it's always been possible to have those features switched on independently.
But the Photos app on the Apple TV doesn't offer individual toggles for each of those features – just "Turn on iCloud Photos," which I imagine is what inspired the question. (I'd also never turned it on specifically because I thought "I don't want that – iCloud Photos is the one iCloud-related Photos feature I don't want to use.")
It turns out that selecting "Turn on iCloud Photos" on the Apple TV enables access to four tabs: "Memories," "Shared," "Albums," and "Library." Most are indeed unpopulated if you're not using iCloud Photos on any other device. However, if you're using Shared Albums on your other devices that aren't using iCloud Photos, the "Shared" tab does indeed display those albums. It also lets you play them as slide shows and set them as the Apple TV's screen saver.
My evaluation would be that the wording in the Apple TV's Photos app is misleading, and "Turn on iCloud Photos" should be interpreted to read something more like "Enable iCloud Features for Photos" with some elaboration on how that works. So I think that was a totally reasonable question, and thank you for spurring me to finally start using something I would have enjoyed using all this time.