According to a report from Reuters, SpaceX has been contracted by the Department of Defense’s National Reconnaissance Office (NRO) to build a network of hundreds of low-orbiting spy satellites capable of operating as a swarm.
There are about half a dozen small companies working on this but apparently the government is more interested in spending money on a company with zero experience with earth imaging. Dunno how I feel about the USG just putting all their eggs in Elon's batshit insane basket
My guess is the optics themselves don't need to be very mind blowing anymore. If this is a constellation, you will basically have the ability to combine many lesser quality images into higher res versions for review, and in near realtime, and from many different angles. Slap some AI upscaling magic in there, some object tracking and things like gait and attribute recognition, and you have something fairly close to 'Enemy of the State' capabilities, minus all the BS zooming and looking through walls.
It's not necessarily imaging as in optics. Could be OPIR, encrypted comms, space to space ASAT, or any number of other things besides just earth imaging.
I assume the hard part here is the deployment of thousands of low orbit satellites at a rapid rate, not the imaging. The government surely already has the imaging tech, it's getting a swarm of satellites up there what's no other company has proven able to do.