Hell, the SNES has surround sound on some games.
Yes, but it's not "true" surround sound since it is still condensed into 2 audio channels (stereo) like the N64, GCN and Wii.
And PS1 and PS2 and maybe Dreamcast. Only a few PS2 games had Dolby Digital or DTS, most had Pro Logic 2.
But whether it's "true" surround sound is not I just an opinion. I think they qualify as true, just not as high quality.
Well, that of "false 5.1" or "not true 5.1" is a way of explaining it. Of course it is 5.1 audio. If you connected a Dolby Pro Logic II to a compatible 5.1 audio device, its 6 speakers will show different channels. The thing is it is incredibly compressed. Hence, there's a lot of loss during the process, so its quality is inferior to other Dolby codecs.
As a matter of fact, we could say in some way that composite video is a compression of 4 channels (red, green, blue, sync) into just one channel, which makes it quite worse. However, that doesn't mean it is the worst (there you have RF, for instance) neither it does not display red, green or blue. It does, of course it displays those colors with a correct synchronization, the thing is quality is way inferior to other options (namely, S-Video, YPbPr and RGB).
Now you guys mentioned, I wouldn't say Toslink is a good option. Why not? For consoles that use Dolby Digital standard (Xbox 360, PlayStation 3, Xbox One and PlayStation 4), you can use either HDMI (for both audio and video) or HDMI (video only) and Toslink.
If we talked about other things like LPCM (the non-compression standard that use both Wii U and Switch) and Dolby Atmos (which will be the future of surround audio), a Toslink won't be useful. Why not? Because Toslink has very small bandwidth. That's why I would recommend to connect everything through the same HDMI cable, which has a very good bandwidth and can transfer many non-compressed audio and high quality video at the same time. So, every console connected to a AVReceiver through HDMI and then the AVR connected to the TV through (again) HDMI would be the best solution. Another interesting thing is that Amazon is crowded of HDMI switches, so finding a reliable one should be easy.