The digital version is still a better value than the Series S. With that tiny ssd in the S before you take away the conversion from powers of 1000 to powers of 1024 PLUS the OS, it'll be a pretty small drive for games.
You'll end up needing to get the Xbox Expansion Drive which will cost a pretty penny. So really in the long run it's a weaker console that will need a storage upgrade sooner rather than later, and It'll cost you more.
Ps5 is just a better value long term.
Not to say that it's the best choice for everyone though.