[2022] Was graphics downgraded with new improvement update?

Depends. Trees that are farther away now show with less detail (LOD), which is a normal technique to reduce performance impact, so those are indeed lower quality based on distance, but that is on purpose.

There has not been any changes to sunlight, but Eco also never used Raytracing.

For clouds I'm not aware of any intentional changes, but those are getting reworked for 10.

We did remove Global Illumination in 9.7.0, as the implementation was very old and pretty broken - given that changes lighting quite a bit, it might be that difference you've seen as well if you had that turned on before. It's coming back later with a better one.