Thank you for taking the time to reply, and for further sharing your expertise to our conversation! I understand different resolutions, that the docking station has its own chipset, and why the Plugable is more expensive than other docking stations as a result. I now have a more nuanced understanding of frame-buffers and how DisplayLink interfaces with an OS like MacOS.
Allow me to clarify the point I tried to make (and admittedly, I didn't do a good job of expressing it previously). Rather than focusing on the technical specs, I had intended to have a more general conversation about design decisions and Apple's philosophy. They know that consumers will want to hook up a base tier MacBook Air to two external displays, and intentionally chose not to build-in an additional frame-buffer to force users to spend more. I sincerely doubt there's any cost-saving for the customer because Apple doesn't include that out of the box.
Apple's philosophy has always been that they know what's best for their users. If a 2020 M1 MacBook Air supports both the internal 2K display and a single external 6K display, that suggests to me it should have the horsepower to drive two external 1080p displays (that's just a feeling I have, not a known fact). And I'll acknowledge that Apple has improved this limitation for the newer MBAs, which allow you to disable the built-in display and use two external displays.
My broader point is that Apple "knows what's best" for their users: they want customers to buy an Apple display rather than to just stick with the 1080p LCDs they already own, because they're not Retina®. Which do you honestly think is a more common use-case for a MacBook Air user: wanting to connect to two monitors (home office, University classroom system, numerous board room settings I've worked in, etc), or to connect their $1200 MBA to a $1600-$2300+ Studio Display? For that, anyone with an iota of common sense would be using a MBP etc since they're likely a creative professional who would want the additional compute and graphics power for photo/video-editing, etc.
I don't disagree with your explanation of the thought-process behind why Apple may have made this hardware decision for MBAs, but it is effectively an arbitrary, non cost-saving decision that will certainly impede customers who expect two displays to just work, since they can do that on their 10-year-old Toshiba Satellite or w/e.