Sadly an Apple TV can't also be the media server (at least for something like Plex). But just about anything else can run media server, and you can go really low end especially if you don't need it to transcode your media. Some software like Infuse will stream the original media file to the Apple TV, and the transcoding happens on device.

True, but of course if you already have a media server, it can almost certainly already act as a Tailscale exit node.

I more or less have running every through a N100 and it has been great. Would have been awesome to replace it with an Apple TV though

AppleTV cant act as a media server. But as a client it's fantastic.

An AppleTV with an app like Infuse will flawlessly play back 4K HDR or Dolby Vision videos client side (no transcoding) as well as 7.1 lossless TrueHD audio. Unfortunately it wont do TrueHD Atmos.