Would be interesting to know. I recently started playing the PS5 version of TSW3 (and had to start from level 0 as a result), so if PS4 to 5 version progress transfer became possible, I’d gladly re-install the PS4 core version and transfer the years of progress over to TSW4!
Unfortunately this appears to be a limitation of the PSN platform and it has been mentioned previously that it's not beong working on anymore as there are no more realistic avenues for DGT to follow. It sucks, but most of the blame lies with Sony, not DGT.
Accurate to an extent in that Sony could have provided a system level solution to this problem, but left it to game developers to implement instead. However, Dovetail can't be completely let off the hook as plenty of other developers have provided this for their games but they chose not to. Which is frustrating in a game where progress can represent hundreds of hours of effort.
You're right, with enough time and resources they certainly could have done however it would have required a third-party system to hist the files on (presumably Dovetail Live) since Sony doesn't let you access storage for other titles (even if you are the publisher). Given that (I think) TSW saves are larger than average and much bigger than anything currently uploaded to DL, I guess DTG just can't justify the investment in both time, additional infrastructure and increased running costs).