The M1 Pro and M1 Max can have multiple display outputs. The M1, be it in the Macbook Air, Mac Mini or Macbook Pro could only ever have 2 display outputs. On laptops, one of those was permanently reserved for the built in display.

Specifically you need the 14 or 16 inch M1 Pro for multiple display outputs. The M1 Pro 13 inch only supports one external display. Same with the M2 Pro 13 inch.

This is very confusing imo

I am referring to the M1 Pro the chip, not M1 Pro as in the Macbook Pro with the M1 chip. 14 and 16 inch Macbook Pros have the M1 Pro and M1 Max CPUs, whereas the plebian tier Macbook Pro 13 inch one has only the lowly M1 chip. I think whoever came up with this product strategy is a mastermind, deserves a raise from the perspective of shareholders and a slow and painful removal of their gonads from the perspective of people who bought the 13 inch MBP.

Regular M2 still has the same limitation of two total displays. Unless you use USB->HDMI adaptors that have their own display controllers.

This is crazy. Couldn't much weaker Intel chips do this years ago?

It's Apple approach to market segmentation: you want more than 1 external monitor? Buy macbook pro with M1/M2 Pro/Max, for a $1000 more.

Intel HD graphics introduced with Westmere (2010) supported dual displays, and then Ivy Bridge (2012) supported three displays on the iGPU.

AMD's Llano (2011) supported dual/triple(1) displays on release and Trinity(2012) brought support for up to four displays at once.

(1)You could do triple displays on Llano, but it took a particular set of boards using Dual-Link DVI to drive two monitors IIRC.