video connect

In my experience, video is not necessarily degraded when passed through a processor (though some may actually degrade or even improve on the video). 

However, using ARC is never the best way to get sound out of the system.  For top audio quality, it's always best to connect your sources (i.e. Roky, bluray, etc.).

If you are using the LG TV to stream from Netflix, etc., I would highly recommend getting a Roku device to replace that and feed that directly into the Lyngdorf.

Please explain Roku device and where it fits in the path of audio signal.
Thanks

A Roku device is an external source unit that is used to stream audio/video from different sources such as Netflix, Hulu, Amazon, etc.  It sounds like you are using the built-in app inside your TV to stream from Netflix, etc.

You would buy the Roku from a distributor (such as Amazon or direct from Roku website).  The Roku has an ethernet port you use to connect to your internet mode.  It also has an HDMI output that you would connect to your Lyngdorf.  You would use the Roku as a source device just like you would use a bluray player.

I think Roku has much better streaming apps that would be available in your TV because their business is really only developing streaming hardware and software.  The Netflix app would continually be updated.  There are a ton more streaming apps available on the Roku.

In reality, there are several different streaming devices you could get:  Roku, AppleTV, Amazon Fire, Google Chromecast, Tivo.  I generally recommend the Roky Ultra because that is the only one that you can realistically upgrade with an external 12V linear power supply (such as SBooster Teradak, Teddy Pardo, Keces, Farad, etc.).  Although, you would have to request a special size DC plug.  The Roku Ultra uses a 4mm x 1.7mm DC plug (which is smaller than standard but still large enough to handle).

I have a combined 2 channel / home theater system and use the Roku Ultra for streaming.  I've been very happy with it.  I use it for Netflix, live TV (YouTube TV), HBO Max, Vudu (movie rentals), Disney+, and more.

Auxinput,
In regards to the ROKU if installed, I would no longer be using the streaming function of the LG OLED?  So connection for video pass through would go as follows: modem to Roku via ethernet
Roku to Lyngdorf via HDMI in
Lyngdorf to LG OLED via HDMI out.

What about Audio? would both signals, audio and video, be delivered to the Lyngdorf via  HDMI from the ROKU to to the Lyngdorf HDMI in?
What about the EARC HDMI of the Lyngdorf?