M1’s GPU came equipped to only support the internal monitor and one external monitor… a very slim configuration, but that’s likely influenced by its smartphone processor ancestry. Smartphones don’t need to power a bunch of displays.
The larger M1 chips have bigger GPUs with more of those fixed function blocks.
It isn’t artificial market segmentation at a software level, but it is certainly market segmentation at a hardware level, and something they knew would happen when they designed these chips.
In the end, they were pretty spot on about the market segments. Most people want/need external display support… but one external display is plenty for most people. People who need more are likely to also want more in general, and the higher end options satisfy that.
It still would have been nice for them to upgrade things for M2.