I'm not quite sure what software you are used too, but if you use Nikon's software you would understand clearly how wrong this statement could be.
Had they(Nikon) done this in a better manner in camera(see my comments in the D850 review thread) .. there'd be no reason not to expect similar/same results in camera as you could achieve in software.
Which software are you referring to? Nikon Scan 4? If so, it most certainly does not make scanning colour negatives easy or foolproof.
There are two problems specific to scanning colour negatives: the orange colour of the film base, and colour shifts caused by fading and staining.
Because of the orange colour of the film base, a straight colour inversion would produce a gross cyan cast, so you have to adjust for that in software. The problem is that the shade and intensity of the orange colour varies from film to film - and in many cases from batch to batch of the same film. Even if Nikon had a menu where you selected the film, that would not solve the problem because the camera does not know the colour of the light you are using (which a scanner does know). If your field of view went beyond the image area and included the sprocket holes, and the camera knew that, it might be able to work out the colour of the film base in the light you were using, but it does not know what the limits of your image are.
Colour negatives deteriorate with time. They suffer from light fading of dyes, and from dark staining (caused by darkening of un-reacted magenta dye coupler). The result is a colour cast in the negative, often yellow but occasionally blue-green, and a straight conversion will result in an unacceptable complementary colour cast in the positive. Pretty much any colour negative stored at room temperature for more than ten years will have a colour cast, and since most colour negatives being scanned now will be at least 20 years old, they are not going to give a satisfactory result without a lot of post-processing. There is no way the camera can correct for this problem.
As far as clipping goes, as in the colour negative and B&W negative scans shown in the review, that is an inherent drawback of mapping the straight line response of a digital sensor onto the characteristic curve of film.
If the digital sensor is aligned with the straight portion of the characteristic curve, so that the mid-tones are reproduced accurately, there
must be clipping of the highlights and shadows. If the highlights and shadows are preserved, there
must be reduced mid-tone contrast. Nikon has, apparently, chosen to retain contrast and allow some clipping, which is what most scanning software does by default because that gives the best-looking positive without post-processing. That is a perfectly reasonable choice for non-critical use. If clipping is unacceptable in a particular image, you need to shoot RAW and adjust the black and white points and the contrast in post-processing. That generally gives better results anyway, but it has to be done image by image so there is no advantage to generating the positive in-camera. Sure, being able to take the RAW and the negative conversion JPEG with one shutter press instead of two is a great idea, but having to photograph each negative twice is not the end of the world.
The D850 negative conversion mode appeals to people who want to digitise negatives, but don't want to go to the trouble of shooting RAW and converting in post - otherwise, they would have already done it. Well, the bad news is, it won't provide the quality of RAW scanning without the work, and it was unreasonable to expect it would.
It may have been a marketing error (surprise) to link the ES-2 so closely to the negative conversion mode of the D850. The ES-2, unlike the ES-1, can be used with DX or FX cameras, allows modern macro lenses to be used, has a slide holder, which speeds up scanning, and has a holder for film negatives. Those things add up to a big advance for people like me, who will never own a D850 and would not bother with scanning to JPEG if they did.
