Can somebody help me understand

I have PMS running on Linux. Connected to it is an Xbox One and an Xbox 360. The 360 has problems playing just about any file. So I looked into codecs and found this page: support.plex.tv/hc/en-us/articles/204103633-What-media-formats-are-supported-

As you can see from the attached screenshot, the movie playing on the 360 is being transcoded despite being both H.264 and AAC 2.0

Can somebody please explain to me why this is happening?