I mean....
Series S might have less memory, but it has enough amount of memory to drive Borderlands 3, either there is an issue with the game or with the Xbox system on Series S.
If this issue is related to the game, it makes things much more ridiculous, I've seen some devs complaining about how limiting the Series S can be for the newer gen of games, but I end up not understanding how limiting it is.
1. VRAM? Just give the Series S worse quality on the textures, we have these options on PC, Series S can definitely get lower textures as well so that games can fit inside the budget.
2. CPU is the same, so it can power the same worlds, engines, physics, and logic.
3. Series S lacks graphical power. Well, it's true, but just like PC, it just needs to deliver a more reduced settings version for Series S, worse AO, worse shadows, worse distance, worse textures, worse GI, or any other demanding option available alongside worse resolutions.
The only way I see Series S being a big issue, is if a dev team like A4Games wants to continue the trend of going full RTGI for their games, Series S (which already suffers so much with Metro Exodus RT Edition), might suffer even more and creating a fallback version is not an option, or simply Star Wars Jedi Survivor which only delivers decent reflections if RT is enabled (also on PC) with no decent SSR as a fallback, it forces people to use RT because reflections without it seems just broken because devs only cared about RT which is enabled on all graphics settings on both bigger consoles, but the truth is, consoles could easily have much better reflections without RT, they simply didn't cared in the first place because it's much more easier to just enable RT..... "It just works"