WORKAROUND. Yes, this sounds dumb but this worked for me. Unplug the display, wait the standard 10-15 seconds and plug it back in. Amazing how after ten months of complaints and knowing this is an issue Apple still refuses to fix it. Even worse is how buttons and options are always hidden unless you know the special key to press and hold on your keyboard.
How does Windows get it right while Apple can't seem to anymore? Maybe they should just switch to being a phone company.
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POSSIBLE WORKAROUND. As stated earlier, by unplugging from your power source and plugging back in, this can force the Mac to recognize your display.
I honestly wish I did not have to use Macs for my job. I'm a UX designer and a larger, secondary display is absolutely necessary yet every other day there's an issue where this thing just refuses to work with it. I've worked on PCs my entire professional career and have never encountered anything like this.
Can't wait for us to finally switch over to new software so we can dump both Sketch AND Macs, just the most frustrating, nonsense experience that Apple refuses to fix. If your experience is somehow worse than using a MS product, maybe it's time to start reassessing.