Why does the screen need USB-C support? I imagine you'd use a Thunderbolt/USBC-DisplayPort cable or similar.
I use a Lenovo Thunderbolt dock for both my M1 16" MBP and a Lenovo laptop running Linux. It runs 2 x DisplayPort monitors, mouse, keyboard, and webcam.
Yep. There are monitors with Type-C, power delivery, usb hub, so they avoid you the need of having a dock. Usually they're priced at around monitor+fancy dock, so it doesn't even cost more for more practicality.