Dynamic brightness & contrast is almost always exceedingly poorly done. The most expensive and well-built TVs don't use it either.
The lighting dilation/dimming can indeed be argued as a nice to have. If done ever so subtly it might even be a boon. (just like bloom)
It's beyond nice-to-have; it's essential.
The dynamic range
of your screen is incredibly limited, even if you have properly calibrated it, colour matched it, and then adjusted it a third time for the prevailing conditions in the room for the time of day you are playing.
On an SDR display the typical range is about 6-7 photographic stops even after all that. On a pro quality display (which actually I guess most games have the equivalent of now, because kit got a lot better in the last decade) where it has proper proportional response in the blacks, you might get 8 stops. Human perception covers roughly 14 stops, and that's before you factor in that in the dark those 14 stops will cover 14 shades of black, which is something most displays are just fundamentally terrible at showing, and also assumes as others have said that you are playing in a properly dark room.
HDR gets you to a decent 10 stops but further emphasises that your screen must be properly adjusted.
Expensive TVs are designed to show what the director and cinematographer/DP intended. And that
absolutely includes "simulating pupil dilation" and further includes judgements about which character's point of view you should be sympathetic with and exposure (plus the tradeoff with aperture and lighting) will be chosen the same way. The game engine has to make those same storytelling choices automatically and frame by frame so you can see it's a hard problem in game design anyway, and on top of that, the technicals in space are a nightmare. With no atmosphere, you need all those 14 stops to deal with shadows, and on our sim gear we just don't have them and will never have them.
Or to put this another way "simulating pupil dilation" is not a fad in simulation, it is completely essential to gameplay. If this game (and racing sims, for example) did not use dynamic exposure you would see absolutely nothing when scooping liquor from the dark side of Mercury, and as soon as you crossed the terminator, you would see a huge 5% grey sphere stretching before you with no apparent craters, dust, anything. Just bleached out greyness.
I thought the compromise was about right in the previous release, and it seems to have been tweaked to flatten contrast now in extreme low light and I do find that annoying; it's a sim; the kit has headlights and night vision
because you should need them in that situation and now you don't. (They definitely changed something about rendering low-light situations because now the gamma slider in-game has less effect than it used to as well.)