That would equate to less "real estate" than what I have on my T460s FHD screen? Of course the screen would be light years ahead to look at. But just sounds a little bit strange with regards to actual pixels/space on the screen?
Yes, Apple doesn't provide for running at the native resolution out of the box (utilities like SwitchResX make those options available, though I don't know if they work with the M1s yet), all the display modes they propose are scaled.
Historically there was a default mode at 2x scaling with 2 above and 2 below, apparently on the M1s the default 2x scaling is the second-to-last and you only have one mode above.
So on the 14" with a physical 3024 x 1964 display, the modes provided natively by macOS are:
1800 x 1169 (1.68x)
1512 x 982 (2x, default)
1352 x 878 (2.24x)
1147 x 745 (2.64x)
1024 x 665 (2.95x)