Compatibility level in AlwaysUpToDate – Microsoft Q&A

Yes, you can run compat level 160 or lower in SQL Server MI with always up-to-date policy.

With compat level, you still have access to many functions added in SQL 2025, for instance some of the REGEXP functions (but not all). With compat level 160 you are also missing out on new optimization feature as for instance Optional Parameter Plan Optimisation. New optimiser features are normally only available under the most recent compat level.

The most important thing with always-up-to-date is the version number of the database format. I believe this is currently 998, which is the same as SQL 2025, but that could change if Microsoft adds a new feature which requires changes to the system catalog. It is not possible to restore a database with a higher format to an engine that only supports a lower format. Thus, you cannot restore your always-up-to-dat1e to SQL 2022, even if the compat level is 160.