The Xbox Series S can run emulated versions of PS2 games.
Just below, you can check out the full video from Modern Vintage Gaming, in which it's revealed how the Xbox Series S can take advantage of the 'Developer Mode' to run development builds of games. It's a great video, and I'd definitely recommend watching the full thing for an inside look at the work that goes into game emulation.
Although several PS2 games such as God of War and Shadow of the Colossus are available to be played through the Xbox Series S's emulator, they aren't polished builds by any means. You're going to find a fair few bugs in the PS2 games available through the emulation, so it isn't a "plug in and forget it" deal, as Modern Vintage Gamer explains.
This is obviously the first time that a Microsoft console has been able to run PlayStation 2 games through emulation. If you're interested in the full capabilities of the Xbox Series S's emulation software, I'd recommend giving the subsequent video below from Modern Vintage Gamer a watch.
In theory, as Modern Vintage Gamer points out, this emulation software should support PlayStation, PSP, and certain Nintendo titles for the Xbox Series S. That's certainly one huge benefit of buying Microsoft's cheaper next-gen console.
If you're still making up your mind over which version of Microsoft's new console to purchase, you can head over to our Xbox Series X vs Xbox Series S guide on the benefits and drawbacks of each console.
Alternatively, if you're trying to get your hands on the cheaper of Microsoft's two new next-gen consoles, check out our Xbox Series S deals guide for an up-to-date list of retailers with stock.