Yes they are, highly saturated - but it varies depending on where they are.
We maintain thousands of peerings with most ISPs all over the world, and we collect performance telemetry from hundreds of millions of players, playing our game globally. Using data science, we can see exactly when things are good and when they're bad.
Because we mostly measure ping and packet loss, when for example - 50k players on a specific ISP all show a huge ping spike in the monitoring graphs between the hours of 6pm and 9pm, we know that the ISP in question is probably congested.
When congestion occurs inside an ISP, the big fat buffers on internet routers will start to fill up, this will incur additional latency, if congestion increases further - the latency will get worse and packet loss will occur when the buffers and queues fill up and get exhausted. Because our game traffic is very small packet size (65-150 bytes) it's very sensitive to delay and buffering, so we can see the effects of congestion better and earlier than most.
Right now, I can tell you some interesting facts - which we're quite surprised by;
Almost all the UK ISPs are performing very well, with very little in the way of any ping spikes or packet loss at peak time - this tells me they still have capacity and are not congested yet, mostly. From our metrics, the only one which appears to be struggling is EE, all the others are doing very well.
However, that's only the UK - just about everywhere else is carnage;
Almost all ISPs in the EU are struggling, with Germany having a really bad time, Italy is on it's knees from 6-9pm, and almost all the other EU ISPs are struggling, with the exception of Scandinavia.
US is all over the place depending where you look, Spectrum is sucking pretty bad, but again - depends where you look.
Not sure why netflix and other companies are doing this. But isp's won't complain because they are using less bandwidth.
You have to understand how the system functions to understand why Netflix are doing what they're doing.
The problem Netflix has; they have so much capacity, they could easily overwhelm most ISPs if all customers started watching their content. If that happened and infrastructure started falling over because of Netflix (which it easily could), providers would probably start de-peering / rate-limiting / disabling Netflix content on their networks, to prioritise normal traffic and remove the congestion. Because remember - the customers of the ISP are not paying their provider anything for Netflix access - they're simply paying Netflix.
By volunteering to turn down the quality, and reduce the bandwidth, Netflix are simply making sure they don't end up 'annoying' ISPs to the point where they become forcibly rate-limited or disabled.. Lets face it - we can all still watch it anyway, they're just being careful - they're not stupid, they have some clever people working there.