Microsoft's Xbox One S was always supposed to be an intermediary console of sorts. It sates gamer's need for an improvement over the Xbox One but isn't quite as expensive as Scorpio. As such, it's focused more on 4K media display than gaming.
However, it's always been unclear where the console stands with pass-through content. This essentially means that the console's HDMI input doesn't support 4K. If you want to plug in a Sky Q box and run it through the console, it won't work.
Plugging in an Amazon Fire TV stick and streaming it through the console won't work either. The official Microsoft statement is that it's not currently implemented, but could be in the future:
“Xbox One S does not currently support 4K pass-through via HDMI-in. We will continue to explore making the changes needed for the hardware to support pass-through as 4K broadcasts become more widespread.”
The company is very specific in its wording, being sure not to rule it out entirely. It seems to us that they're just waiting to see if there's enough demand out there before they begin working on a firmware update.
This may push some users who haven't purchased the console to wait for project Scorpio, which is bound to have more widespread support. It's possible that Microsoft is even waiting for the Scorpio release before they implement the feature for the One S also.
Microsoft clearly values the Xbox's simple passthrough ability, as it even comes as a suggestion on setup. 4K TVs and monitors are only becoming more widespread, and the release of consoles that support will only encourage more users to adopt. If it can be achieved through a firmware update then it only makes sense that support will be pushed out to one-up or compete with the Neo.