There have been reports that the new iPhone XS has an automatic ‘Beauty Mode’ that smooths people’s skin. It is true that the new iPhone XS selfies do look a lot smoother than the previous iPhone X. This could be a ‘beauty mode’ but I doubt it. If Apple did have a deliberate beauty mode they would be crazy not to give users the option to turn it off. I think what is happening is that Apple are using noise smoothing.
Because of limitations in camera sensor technology when you take a photo in low light there is a ‘grain’ that appears in any photo. This happens on digital cameras, old film cameras and also on phone cameras. The less the light the more grain. If you try to take a photo in very low light you may have noticed this. Already phones compensate by raising the brightness of the photo in low light, and smoothing out the image to get rid of this grain.
I think what is happening here is that when the face detection technology detects a face, it sets the brightness of the whole photo to make the face clear. If the face is in low light, the iPhone XS will raise the brightness of the whole picture (hence the shirts etc changing colour in the examples) and it will also therefore apply some smoothing to the entire picture to reduce the grain caused by the low light. This could possibly cause the smoothing of skin blemishes as the phone can’t tell the difference between a skin blemish and the grain caused by low light.
Notice that it only happens on the lower quality ‘selfie’ camera. The main front camera will have a better sensor and so not need so much smoothing.