I am not an audiophile and am sharing my observations.
If I play a DTS HD MA 5.1 movie from my PMS I do not get surround size. I checked the playback info and it shows:
Audio:
Codec dca → aac
Bitrate 3567 ->774
Channel 5.1->
Decision:
Reasons:
Cannot direct play with protocol http, codec dca, Reason: Codec dca is excluded per setting DTS: false
Cannot direct play with protocol hts, codec dca, Reason: Codec dca is excluded per setting DTS: false
Direct play not available; Coversion OK
If I force direct play not sound comes out.
Acquire a Nvidia Shield Pro or Amazon FireStick 4K Max Gen 2 and connect it to an HDMI input on the Yamaha receiver.
Shield/Firestick ← HDMI → Yamaha ← HDMI-ARC → LG
The Shield will passthrough both TrueHD and DTS-HD MA audio to the Yamaha.
The FireStick will passthrough TrueHD. For DTS formats, only the DTS 5.1 core is passed. Any -HD MA info is discarded by the FireStick.
Note: I could not verify whether or not the Yamaha supports 4K HDR passthrough. If it does not, the above would work for 1080p and 4K SDR video, but not HDR.
What is happening with your current setup:
The Yamaha receiver supports HDMI-ARC, which supports Dolby Digital 5.1, Dolby Digital Plus 5.1, DTS 5.1, and PCM 2.0. Lossless formats such as DTS-HD and TrueHD are not supported.
The LG C1 OLED does not support DTS audio. Therefore, Plex Media Server transcodes it to a supported format. In this case, AAC.
The LG passes AAC to the Yamaha as PCM.
As the connection is using HDMI-ARC, it is limited to PCM 2.0.
That is why you get 2.0 instead of 5.1.
If you force Direct Play, Plex Media Server sends DTS audio to the LG. The LG does not understand DTS, so it is discarded. That is why you get no audio when forcing Direct Play.
Thank you @FordGuy61, if all answers where like yours 
Operationally would anything change? Today I run the plex app on my TV that is plugged into the network. As soon as I power up the Yamaha the TV detects it and routes audio to it.
With the Firestick / Shield would I use the plex app on the TV or on the device itself?
Thanks
My setup:
Nvidia Shield Pro (2015) ← HDMI → Denon AVR-X4300H ← HDMI-ARC → LG B7 OLED
When I power on the Shield both the Denon and LG also power on. The LG & Denon switch to the correct HDMI inputs. The volume up/down on the Shield remote controls the volume on the Denon.
The same happens with a FireStick 4K Max Gen 2 (I’ve a FireStick connected to a different TV, but tested it with the Denon & LG when I first received it).
If I use the TV remote it functions as yours does now. It powers on the Denon and sends audio via HDMI-ARC. Volume up/down on the TV remote controls the volume on the Denon.
I rarely use the TV remote or any TV based apps. I use Plex, Amazon Prime Video, and YouTube TV on the Shield. Navigating in the apps, switching between apps, etc. is much faster using the Shield than the TV based apps. About the only time I use the TV remote is to watch local TV via antenna during severe weather season (I live in Tornado Alley and YouTube TV is 2 - 3 minutes behind real time).
There is a bit of setup with both the Shield and FireStick to control the TV & receiver. It is straightforward and takes maybe 10 minutes. Just enabling/disabling the options to to control power, volume, etc.
