Unfortunately this issue with USB hubs made me return my MacBook Air today. As others here said, this is not a small bug which one can work around, instead this is a fundamental problem which prevents many people from using MacBooks. I bought it for work and I can't connect mouse, keyboard and display to it.
My setup:
MacBook Air M1, 16 GB
Anker 5-in-1 usb hub (no power delivery)
Monterey 12.1
Problem:
Usb hub does not connect - power LED on the hub does not even come on.
I spoke to a Apple support today and I've been told to "wait for next release" - which is definitely not a solution for me given that I need this computer to work. I didn't have other choice except of returning mac - I can't easily revert back to 11.2, I can't keep buying more and more usb c hubs praying that one of them will eventually work.
Very disappointing. Bugs happen, but the fact there's no way to roll back make this situation much worse.