If you haven’t whitelisted any resolutions, but have enabled refresh rate switching, then Kodi is allowed to switch resolution up to match that of the video, but not to switch down. Presumably you have set the Kodi UI to run at 4K, so that’s the only resolution Kodi can now use. If you were to set the Kodi UI to run at 1080p then it would be able to switch between 1080p and 4K, but anything lower resolution would still be upscaled to 1080p.
Note also that you shouldn’t have the Kodi UI running at 4K. The OSMC skin is not optimised to run at that resolution, so it won’t look any better than 1080p, and performance will be worse.
And finally note that everything I just said is discussed in my whitelist guide, so it would have saved me some typing if you’d read it.