I have this issue with my new 2021 16" M1 Max MacBook Pro. It's connected to my Pro Display XDR, which I usually use something like SwitchResX to use in HiDPI mode at 3840x2160 on my previous Intel MBP. Now the ability to use 3840x2160 in HiDPI is not accessible in any such 3rd party resolution app.
The same here, what a crap! Returning the new 2021 MacBook Pro and not going to use it again until this issue is resolved.
knuhol
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Stockholm, Sweden