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Regular M2 still has the same limitation of two total displays. Unless you use USB->HDMI adaptors that have their own display controllers.

This is crazy. Couldn't much weaker Intel chips do this years ago?

Intel HD graphics introduced with Westmere (2010) supported dual displays, and then Ivy Bridge (2012) supported three displays on the iGPU.

AMD's Llano (2011) supported dual/triple(1) displays on release and Trinity(2012) brought support for up to four displays at once.

(1)You could do triple displays on Llano, but it took a particular set of boards using Dual-Link DVI to drive two monitors IIRC.

It's Apple approach to market segmentation: you want more than 1 external monitor? Buy macbook pro with M1/M2 Pro/Max, for a $1000 more.