While forum warriors (on the web in general) will argue how this one pixel over here looks better with DLSS if you zoom 5000% in and don't play the game, the reality of it is that for 99.99% of people the visuals are pretty much indistinguishable during normal gameplay & with the open-source nature of the tech and that it doesn't required dedicated silicon to make use of it, it's definitely making DLSS seem superfluous now particularly as the most important part is console-compatibility. I don't think DLSS will really disappear, because it's already plugged into most major engines so it's just gonna carry over & afterall it still has an advantage, just a smaller one now. Though I'd say the already high availability of DLSS in existing titles is an even bigger advantage, particularly some would-be classics like RDR 2 etc, unless AMD really hustles to gain some ground on those fronts (which seems unlikely as they're almost entirely forward-focused when dropping new tech). Plus I'd not bet against Nvidia working on revitalising it (in whatever new way) for the next-launch so that it maintains its status as a "must-have" feature.
Amusingly I think this is actually worse for XeSS as the compatibility for that is more restrictive & they got beaten to the punch even though they've been showcasing it since way before FSR 2.0 got talked about, and from everything they're saying the actual cross-compatible version will come later (2023?) and so will when they open source it. Congrats to Intel for succeeding to fail yet again.