Kind of. There's a physics limit as well. Shorter-wavelength (bluer) light can focus to a tighter/smaller spot than longer-wavelength (red or infra-red), so they can get more bit density with bluer BD tech than the "redder" wavelengths used on DVDs and CDs. The tracking technology has improved a bit over the years as well. Again, older CDs are the worst, so they can't read the closer-packed lines of spots on a DVD disc, and DVD drives can't read BR discs. Bottom line is that Blu-ray technology can read CDs and DVDs, but the longer-wavelength lasers and less-accurate servos in DVD and CD drives simply can't read or track the lines of smaller spots on BR discs.
That said, it is fundamentally correct that there's no hardware reason a new PS5 couldn't be compatible with older PSs. Assuming they include an optical drive at all then it would have to be blu-ray compatible these days, and if they have that then they'd get CD- and DVD-compatibility for free. Same deal with CPU and GPU and memory. Modern hardware can easily handle legacy titles at the same or better performance and cheaper cost. Probably not even (much of) a software issue either.
And yes, gamestop is full of crap.