This is fascinating.
Instagram head Adam Mosseri observed in his weekly Q and A on IG Stories last week that the quality of video for Stories and Reels posts can be lowered or enhanced at different times based on the engagement each video gets.
In addressing a question about some older Stories appearing blurry, Mosseri said:

"In general, we want to show the highest quality video we can when someone is watching a Story or Reel […] But if something isn't watched for a long time, because the vast majority of views are in the beginning [after initial posting], we will move to a lower quality video, and then if it's watched again a lot, then we'll re-render the higher quality video."

Mosseri further indicates that whenever a user is loading a video on some low-speed internet connection, the app will give them a lower quality video so it loads more quickly.

Which makes sense, in terms of optimizing resources to provide the most excellent user experience for most users, or, to put it differently, the more people view something, the better quality it should have. But that still leaves less viewed content behind since the decrease in playback quality likely will prevent engagement and aggravate that lack of initial views even further with the passage of time.

Which appears to be an inadvertent outcome of the algorithm, and something that potentially impacts your content.

In response to his explanation of what led to the posts appearing, Mosseri subsequently said that:

"It works at an aggregate level, not an individual viewer level. We bias to higher quality (more CPU intensive encoding and more expensive storage for bigger files) for creators who drive more views. It's not a binary threshold, but rather a sliding scale."

Which again means that the system inherently benefits bigger creators, which is something that Mosseri has previously claimed that he's working to correct.

In April, describing an adjustment to the Instagram ranking algorithms aimed at benefitting the smaller creator, Mosseri said, 

"Smaller creators historically haven't gotten their fair share of reach on Instagram, and we want to change that. So we're making some changes to how we rank recommendations to give smaller creators a better chance of breaking through.".

Giving more popular creators better video quality seems somewhat contradictory to that goal but again, Instagram also must consider the user experience generally.

Is this it?

Another response to his video quality explainer, Mosseri said that:
"In practice it doesn't seem to matter much, as the quality shift isn't huge, and whether or not people interact with videos is way more based on the content of the video than the quality. Quality seems to be much more important to the original creator, who is more likely to delete the video if it looks poor, than to their viewers."

Yeah, I really don't know, don't feel that I'd be nearly as likely to share the video if it's sort of blurry, and not the best quality shot.

But the only one with the data is Mosseri and he knows how this impacts for bigger and smaller creators. So we have to take his word that it's really minimal, though, it's also worth noting for your metrics, that older, less popular video clips might have been displayed in a lower quality. Which may impact engagement.