The layout engine is limited. It does flow text quite well, but when I had mine (the screen broke a few months ago) I was working on adding more features to the rendering engine.

It's easy to write a HTML & CSS layout engine to support most of the epub spec, but hard to do it well on such a constrained chip. Even things like nested lists and inline code snippets are a challenge.

That must be why Amazon does a lot of pre-processing on their server. They know what device they are sending to and can tailor the file for that device.

Maybe expecting the X4 to look great is asking too much. It took Amazon years to get it right on Kindle. Hyphenation is a difficult task.