Video game console are general computing devices. Their input & output tends to be limited (no keyboard nor mouse, at least by default), but they still run arbitrary programs (namely, any game).

One major, technical differences from PCs, is the uniformity of the hardware. This is becoming less true, but consoles traditionally have fixed hardware. No "works on my machine" problems on consoles. This also guarantees stable performance characteristics, that developers can optimise for. (This is less true now that consoles are resembling PCs more and more internally).

This is even more visible on older consoles: take an N64 (PS2), plug in a cartridge (insert a CD), and voilà you have your game, completely separated from any other program. Perhaps one of those programs could be GNU/Linux, but the default would still to be running on the bare metal, without interference from other programs. Quite unlike the PC there.

Incidentally, I could see a new game console solve the Thirty Million Lines Problem. https://caseymuratori.com/blog_0031 Fixed, powerful hardware with a well defined interface could possibly trigger the OS competition that is so sorely lacking rights now: Windows, Linux, MacOS, IOS, Android, and if you pick a particular niche (Server, Mobile, Desktop), you'd rarely see more than 2 significant contenders.

They can continue to use the PlayStation store, continue to have exclusive games, and need not see any difference except by choice.

What is the downside?

The same can be said of Macs and iOS devices.

Not really, the economics are just better for the platform with vendor lock-in. They'd still recoup their costs via their store, which they can gift powerful advantages like making it default, having it be more integrated in various ways, etc. It would likely end up as a power-law distribution of store usage with the platform owner on top, so platforms would still make their profits. Having an option for another store wouldn't be the end of anything, and would improve consumer agency significantly.

This is a disingenuous comparison. Epic does not sell content not made by Epic in Fortnite, while Apple sells content not made by Apple in the App Store. This is like saying a branded clothing store in a mall has to sell things that aren't of its brand if it wants to complain about the mall throttling its sales.