No, Sway supports downscaling. Augmenting downscaling with exact fractional scales is still in discussion: https://gitlab.freedesktop.org/wayland/wayland-protocols/-/i... (And Firefox has a prototype implementation using wp_viewporter but you have to set the scale manually.)

Of course, independent of the desktop environment, you could just tell supporting applications to just manually render bigger UI (exactly how you would on X11 with some TOOLKIT_DPI variable thing per UI toolkit) and keep the monitor scale in the compositor at 1x. That's probably what you've been doing. That doesn't support multiple monitors with varying scale.