Is that true? Certainly it's true that the client changes the quality of what it's sending based on what its uplink supports, but what if a client has very good uplink and sends a high quality stream, but 1 (out of some larger number) of other participants doesn't have the downlink to receive it? Does Zoom actually instruct the sender to degrade the quality of what it uploads, and so everyone gets a worse experience? That seems unlikely.
It's called scalable video coding. The source sends multiple streams of packets depending on their upstream, and the more streams you get the higher quality the resulting video. Each client can tell the server which streams they want to subscribe to, which are then picked apart and multiplexed per the needs of each receiving client.