Nanite doesn’t care as much about material instancing as much as you’re worrying about. You also don’t want to use the old streaming system, you’ll never get around the headache of managing streaming as well as just using virtualized texturing.
You also don’t want to use 8k textures. The Coalition (the Gears studio) found it makes little difference over 4k for them, and they get reasonably close in with their camera. But the problem virtual texturing doesn’t solve is disc space; which is also the reason you want to use runtime virtual textures instead of baking every instance into something unique (streaming virtual texturing). The premier title for UE5, STALKER 2, is looking to come in around 200gb, that’s after compression, and very likely using 4k textures and a lot of virtual texturing. High rez textures can balloon your disc size incredibly quickly, even for smaller projects, it’s a good idea to think about trading off performance simply for the sake of keeping disc size down.