DLSS is not a blanket "everything is improved" setting. It sacrifices visual fidelity for better performance, and to try and give people with lower specs an image they otherwise wouldn't have. It just happens to sacrifice much less visual fidelity than its contemporaries, such as FSR. If you have a low end PC, you may see a better image with DLSS on because it is trying to compensate for your bad hardware. But if you have good hardware, it may produce a worse image because your hardware is inherently better.

With DLSS always on, it will likely give you a worse image if your hardware can produce a better result on its own. With DLSS only activating to help compensate, you may be finding that it isn't activating to compensate at all. So I'm in agreement that "always on" makes it look worse on your rig because your rig is capable of producing better results without it.