My solution is using a 40cm type-c - type-c cable coming with Samsung T5 SSD.
The issue was - not working USB peripherals connected to MBP 16 M1 pro (Monterey 12.0.1) through the internal USB hub of the DELL U2520D monitor. The monitor connects with a single type-c - type-c cable to MacBook.
Connecting the monitor to MBP with that short type-c cable everything started to work: MacBook is charging from the monitor, USB hub is working, the monitor showing image correctly.
Anyway, that is a huge limitation that we need to have special cables to make this all work again. No such problems were with the same setup but MBP 15 2017 on Catalina and normal 1m long type-c cable between MBP and the monitor.
Hope this gets fixed soon.
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That is very annoying! In my case, the sound interruptions happen as soon as I start typing in IDE CLion with Clangd working in the background. Music is playing in Firefox 94.0.2. MBP 16 M1 pro, Monterey 12.0.1
The workaround with 96kHz in Audio MIDI Setup did not work for me. It is awful
Monterey 12.1 (21C52) MBP 16 M1 Pro. The issue is still there