You have to use the ATV icon on the Apple TV 4K to watch purchased movies. Was going through computers icon to access my movies, which works for ripped movies, but not for purchased movies.
I think you are correct, I just ran into this same problem last night. I use a Mini as an iTunes server with over 2tb of ripped movies plus a lot of downloaded iTunes movie purchases. This has always worked fine until last night. I am seeing the exact same thing as you now.
When I choose an iTunes purchase that was downloaded to the Mini using the Computers app, I can select the movie and it even gives me the option to continue watching from where I left off or starting from the beginning. But when I click the play button, it "thinks" for a few seconds and then puts up an alert to the effect "this movie cannot be played on this device".
As you said, all my own ripped movies still work fine in the computer app. Yes, I can still watch the iTunes purchases in the TV app, but that is something completely different, it is streaming the film from Apple's servers over the internet instead of playing the downloaded file on the Mini.
Very annoying, I hope this is a "bug" and not a "feature". This creates several gigabytes of internet traffic instead of just using my local, downloaded copy. But I also have a lot of movie playlists - for example, I have one called "1950's Science Fiction" organized by release date. The downloaded iTunes purchases no longer work in these playlists now.
I didn't check to see what version of TVOS is on this AppleTV, I assume it's the new one since it's set to auto-update. I have a second AppleTV in another room and everything still works properly on it, so it probably has not auto-updated yet. I tried restarting the AppleTV and that didn't help. Have not tried restarting the Mini yet or doing any other troubleshooting yet, so maybe this is just a glitch? But it's certainly something new, never had this problem before.