If I use Devolution Spray Z to devolve Eternatus VMAX with "Eternal Zone" Ability with enough damage already on the devolved Eternatus V to knock it out, is it KO'd before having to reduce my Bench down to 5 Pokemon, or if I discard it to reduce my bench is it not KO'd?

Well if the Eternatus VMAX is active it would get KO'd after reducing the Bench, but if the devolved Eternatus V is on the bench you could discard it as part of the bench reduction to avoid a KO.

Relevant cards

SWSH3_117

SWSH3_192