MacBook Air uses Thunderbolt 3, which only requires 1 additional display. Thunderbolt 4, which the MacBook Pro 14/16 has, requires support for connecting at least two additional displays. [0]
It has nothing to do with thunderbolt versions; intel macs (or other laptops with intel gpu) with tb3 support more than one external displays.
The support depends on the amount of display outputs from the display controller. Base m1/m2 has only two, and you need one for the internal display, leaving only one to be routed through thunderbolt or usb-c alt mode. Pro/max/ultra have more of them, so they can support more displays.
The Thunderbolt specs define minimum quantities of connectable external displays. Thunderbolt 3 requires support for 1+ connected displays, Thunderbolt 4 for 2+. Apple creates an artificial restriction for profit reasons, and does not equip MBA with Thunderbolt 4 as a result.
TB4 has introduced support for Displayport 1.4, with UHBR, which has finally enough bandwidth to connect two 4k@60 displays per port (i.e. daisy-chain them). If has nothing to do with how many streams are "required support"; it was bandwidth limitation. Again, per port.
Apple devices with base M1/M2 do not support multiple displays even if they were low resolution (thus fitting into the bandwidth requirements), or if you were willing to connect them with separate cables through separate ports. The Displayport encoders are simply not there, and by connecting chiplets into Pro/Max/Ultra, they are.
Is it used for market segmentation? You bet it is. But it is Apple Silicon limitation, not Thunderbolt. As I wrote before, TB3 laptops with Intel GPU had no such limitation, though you had to use multiple cables and ports if you wanted multi 4k@60.
Interestingly, the M2 Mac Mini has TB4 and supports two connected displays, because there isn't an internal one. Yes, it's still 2 total displays, but it's the only non-Pro Apple Silicon machine with TB4 instead of TB3. I'm not sure if the only real distinction is allowing a second monitor on the link, or if there is additional bandwidth as well.
DisplayLink still does not fully support 4K hiDPI displays correctly.
Beta support is there in DisplayLink software on macOS for scaled 4K displays, but it does not provide full colour bit depth. The colours are washed out and the display lacks contrast.
So yes, Display Link works, but it’s not a solution for anyone wanting a Retina experience.
I’d be pleased for someone to tell me in wrong and show me how it can be done!
