To preface I'm using an Nvidia 4070 and run on ultra graphics settings (normally). To the mods, if this issue already has a thread or has been discussed please let me know and I will take this down.
I feel like there's a bug (or two) happening. First one is that x16 texture filtering seems to be broken in game, I could enable it but it was not actually enabled until I did so in Nvidia Control Panel. It's not the main topic, but it was breaking my Gale's modded beard in game so I thought I would mention it. The main issue is that shadows in this game are coming out grainy or static-y. It can look exceptionally bad at times if it's hitting someone's face during a cutscene for example. Resolution Scaling and DLSS are the only fixes I have found, but personally I don't like using RS.
The top images are with SMAA (you will also see very similar results with TAA) and shadow quality set to low, the close ups are shadow quality high. The bottom are with DLAA, low shadows (left, high right) and Nvidia sharpening+ filter (DLAA + the filter help replicate SMAA+in game sharpening decently close).
Here you can see a video comparison of SMAA+high and low shadows vs DLAA. (I would recommend setting video quality to highest and fullscreen so you can really see it)
The funny thing is, it only seems to really affect outdoor shadows. Here's some from the Act 1 Crypt. You can barely tell which is which and shadow quality is set to high in both. (SMAA first, DLAA second)
I'm not a tech wiz, so I don't have answers but if anyone else does (or if I'm just being stupid here) I would love to hear them! I will also be submitting a bug report after I post this. I will link various posts and threads on other platforms that also talk about this issue, some of which include Steamdeck, PS5 and other brand GPU users. There are many other threads I didn't post besides these ones, just search 'grainy' on Reddit to see more. Thank you!