You’re running into the limitations of the Plex LG app (Samsung behaves similarly).
I have an LG B7 OLED. The limitations are one of the reasons I purchased a Nvidia Shield for myself and give Amazon FireSticks to my family/friends as birthday/Christmas gifts. The Plex Android TV app direct plays PGS, VOBSUB, and SRT subtitles even if the video or audio is transcoding (reference). ASS subtitles still result in a video transcode and subtitle burn, but I’m not aware of any Plex client that handles ASS subtitles well.
Here is how the Plex LG app handles subtitles:
PGS & VOBSUB Subtitles (image based)
Enabling these forces a video transcode to burn the subtitles into the video stream. I do not know if this is a limitation on the Plex or LG side of things.
SRT Subtitles (text)
If the media is direct playing, SRT subtitles direct play.
If video or audio is transcoding and SRT subtitles are enabled, Plex Media Server will burn in the subtitles. This is done to keep the subtitles in sync with the video and audio stream. This is due to a limitation in the streaming protocol used between the server and the LG TV. (*)
ASS Subtitles
If Burn Subtitles = Automatic in the Plex app, Plex treats ASS subtitles like image based subtitles.
Enabling them results in a video transcode and the subtitles burning into the video stream.
If Burn Subtitles = Image Only, Plex treats ASS subtitles like text subtitles. If the media is direct playing, Plex will direct play the subtitles. However, any formatting information, such as location, color, etc, is ignored.
(*) A Plex employee mentioned the streaming protocol limitation on a post quite some time ago (over a year). Unfortunately, I can no longer find that post (I lost my bookmark for it).
