Key highlights from Sony’s support page about this include:

PS4 to PS5 Upgrade With Disc Drive

1. Sign in to your existing account on your PS5 console (or create an account).
2. Insert the eligible PS4 game disc.
3. Go to the game hub for the PS4 game.
4. Select the upgrade offer on the game hub and review the upgrade offer.
5. Select Download (or purchase with the discount price) to download/purchase content.
6. After the download is complete, you can play the PS5 digital game by inserting the PS4 game disc. You will need to keep the disc inserted each time to play the game.

PS4 to PS5 Upgrade With Digital Copy

1. Sign in to your existing account on your PS5 console.
2. Find the PS5 game in PlayStation Store, or by Search, and go to the game hub for the PS5 game.
3. Select the upgrade offer on the game hub and review the upgrade offer.
4. Select Download (or purchase with the discount price) to download/purchase content.
5. After the download is complete, you can play the PS5 game.

Please note that the ability to transfer game saves between a PS4 version and a PS5 version of the same game is a developer decision, and will vary title by title for cross-generational games

In terms of PS4 backwards compatibility on the PS5, 99% of PS4 games will work on the PS5. There’s a small list of PS4 games which won’t work.

Certain games will get a PS5 boost. Sucker Punch announced that Ghost of Tsushima will be boosted on the PS5 with faster load times (they’re already pretty good on PS4) as well as 60FPS.

https://www.gamespot.com/articles/how-to-upgrade-your-ps4-games-to-ps5/1100-6483122/

https://blog.playstation.com/2020/10/09/ps4-games-on-ps5-your-top-questions-answered/

Nice. I've waited to play Ghost Of Tsushima hoping for a better running version on next gen.

I feel like the backwards compatibility pretty much sells me a PS5, seeing as I'm still using a Launch PS4 and my whole collection of hundreds of games is digital. For the first few months it's probably going to be exclusively used to play PS4 games. Will be interesting to see the varying performance improvements on the games with notoriously poor FPS like The Last Guardian.

Yeah this all seems pretty solid.

Cool... now if it were only possible to own one.

@petesix0: Why would you expect anything else? Sony's not gonna allow you to share your disc with your mates and give them all a free copy of the game.

@arjailer: Hadn't entered my mind until I read it here. I mean I get the kind of problems with any system that promises "Enter the disc once and we'll honour your loyalty", and I'm in no hurry for people to create a great trash pile of discs. Also tbh PuyoPuyo Tetris has kind of lived in my PS4 drive for a year and a half.

Glad they clarified it. For the longest time I assumed that most PS4 games actually wouldn't be back compat because of that 100 games list or something they talked about. Either way the messaging didn't feel very clear so good to know it's just as easy as on the Xbox.

@sweep: I’m in the same boat that I’ve bought digitally, and I’m still working on some of my backlog. The first year of the PS5 is most likely just going to be me working through some games I still need to finish while buying a couple of PS5 games when they’re out.

When I stopped buying discs, this was part of the hope. As a kid I appreciated the ability to trade games in for other games (or weed money) but as an adult there've been a number of times where I've wished I could just scroll through all the games I've owned or played in my life. That was what made the Library page on my PS4 something I'd just go to and look at from time to time; never in my life did I have more than 10-20 games in my possession at any one time, but there lies 200+ games I can just scan over and think about my time with them (or, with most of the PS+ games, wonder if it's finally time to give them a shot) and my fingers remained crossed all generation I could just download and play those again if I wanted.

For some reason the whole Control situation really shook my confidence in that because I guess I just misunderstood something fundamental about console development. Another assumption I'd made was that the jump from PS4 to PS5 would be more akin to just buying a new graphics card for a PC than it ever had been for console players, and while it does sound like the PS5 will have some features akin to what the PS2 would provide certain PS1 games, any dramatic increases would still have to come from a differently programmed game and thus re-releases and remasters will remain a thing for us. It's better than nothing, though.

Nice to know that my PS4 discs will work with the possibility of frame rate improvements. But storage space seems to still be my immortal enemy on consoles. 825GB ain't much to work with when you're used to 8TB.

@facelessvixen: at least your ps4 games will continue to work fine on an external drive.

@haz: I don't know if anyone has pointed this out but there's confusing typo in the title.

I was like is it compact version of the ps5 or does it mean backwards compatible 😅

@giant_gamer: Thanks for that, I edited the title :).