It doesn't because the M3 has two dedicated DP outputs. O̶n̶e̶ ̶c̶a̶n̶ ̶b̶e̶ ̶r̶o̶u̶t̶e̶d̶ ̶t̶o̶ ̶t̶h̶e̶ ̶T̶h̶u̶n̶d̶e̶r̶b̶o̶l̶t̶ ̶a̶n̶d̶ ̶t̶h̶e̶ ̶o̶t̶h̶e̶r̶ ̶c̶a̶n̶'̶t̶.̶ ̶O̶n̶ ̶t̶h̶e̶ ̶M̶3̶ ̶M̶B̶P̶,̶ ̶t̶h̶e̶ ̶D̶P̶ ̶t̶o̶ ̶H̶D̶M̶I̶ ̶c̶o̶n̶v̶e̶r̶t̶e̶r̶ ̶i̶s̶ ̶c̶o̶n̶n̶e̶c̶t̶e̶d̶ ̶t̶o̶ ̶t̶h̶e̶ ̶f̶o̶r̶m̶e̶r̶ ̶o̶u̶t̶p̶u̶t̶,̶ ̶t̶h̶e̶ ̶d̶i̶s̶p̶l̶a̶y̶ ̶t̶o̶ ̶t̶h̶e̶ ̶l̶a̶t̶t̶e̶r̶.̶ ̶O̶n̶ ̶t̶h̶e̶ ̶M̶B̶A̶,̶ ̶t̶h̶e̶ ̶d̶i̶s̶p̶l̶a̶y̶ ̶i̶s̶ ̶c̶o̶n̶n̶e̶c̶t̶e̶d̶ ̶t̶o̶ ̶t̶h̶e̶ ̶r̶o̶u̶t̶a̶b̶l̶e̶ ̶o̶u̶t̶p̶u̶t̶.̶ The M2 also has a routable output, you can connect two USB-C displays to an M2 Mac mini if you don't use the HDMI port. It's unclear why Apple didn't enable that feature on the M2 MBA.
Edit: I had a brainfart and forgot that both ports are routable. It's market segmentation or stupidity like with the M2 MBA.
Can't edit anymore: this also applies to the M2 MBP, and both of them could get this feature in a software update like the M3 MBP. But it's unlikely, because of greed.
So I still need to use Instant View with my docking station, got it. Been using that on my M1 air to drive 2x4K displays (the 30Hz display isn't that useful if I'm mousing around, though)
It's set up as 3 separate displays, from left to right: 4K30 (you can also notice compression in color saturation), 4K60 (main monitor), built-in display. Even at 30Hz, the second 4K monitor is good for keeping up documentation.
