re: LG Surround Sound sucks playing Netflix

Bit streaming means outputting the original digital audio stream unaltered, bit for bit, regardless of original format (Dolby Digital, DTS, ETC). Many TVs and soundbars can't decode some surround formats like DTS, so you have the option of outputting a down mixed generic digital audio signal (PCM) so you have basic 2 channel sound on these devices.

The wrinkle in your case is that if the Netflix app is truly native to the surround system, there's no reason it would need to send an audio signal to your TV at all; audio should be handled entirely by the surround system. If the Netflix app is actually running on the TV, that would explain the issues you're having as many TVs can't output a multichannel audio signal.

Also, you mentioned optical cables earlier in the thread...optical digital cables can't handle the newer surround formats like Dolby Digital Plus used by Netflix and the Dolby/DTS HD formats used on Blu Ray discs. Should be using HDMI cables between components; a single HDMI cable will handle both audio and video.