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Re:Don’t format a drive of M1 Macs from recovery mode by tinus_hn on Saturday February 20, 2021 @05:52AM (#26203222)
They have documentation for this:

https://support.apple.com/en-us/HT201065

To be honest I’m not 100% sure if the ‘sign out of iCloud’ also removes activation lock, but I do think so. They also refer to the steps in the Activation Lock article:

https://support.apple.com/en-us/HT208987

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