the first 5k imac was actually a 2014 release. i got mine used much later, and eventually gave it away to a friend a couple months ago this year. i was pretty frustrated by the limitation and did research on converting it, before the kits were widely available.
during design and manufacturing of the initial 2014 release, there wasn't any off-the-shelf control board capable of driving the display. so internally, there's a customized controller with a specialized 5k mode that appears as two hardware displays, using two displayport channels for interlaced lines. a custom driver presents it as a single logical display to the OS (this is why windows support required a custom driver, and linux still has no support).
so i think primarily the reason they didn't set up target display mode is that they barely got it to work on its own. target display mode would have required significantly more development.
consider that DP didn't even announce protocol specs that could support the 5k resolution or tiled displays until a month before the imac release.
but yes, disappointingly, later 5k imac releases didn't restore the feature. at this point they have 'sidecar' and i guess they consider that a solution.
during design and manufacturing of the initial 2014 release, there wasn't any off-the-shelf control board capable of driving the display. so internally, there's a customized controller with a specialized 5k mode that appears as two hardware displays, using two displayport channels for interlaced lines. a custom driver presents it as a single logical display to the OS (this is why windows support required a custom driver, and linux still has no support).
so i think primarily the reason they didn't set up target display mode is that they barely got it to work on its own. target display mode would have required significantly more development.
consider that DP didn't even announce protocol specs that could support the 5k resolution or tiled displays until a month before the imac release.
5k imac release, oct 16: https://web.archive.org/web/20171205093037/https://www.apple...
vesa dp1.3 announced, sept 15: https://www.displayport.org/pr/vesa-releases-displayport-1-3...
but yes, disappointingly, later 5k imac releases didn't restore the feature. at this point they have 'sidecar' and i guess they consider that a solution.