Earlier quoted context omitted.
M1/M2 MBAs are limited to one external display. The M3 MacBook Air relaxes this restriction by allowing two external displays.
... When the clamshell is closed. With an open one it is still just one external display.
The addition is the ability to have two external when closed; likely this could have mainly been done in software if they cared.
(You can get more than one external on a laptop with the screen open if you go up to the Max or Pro or whatever.)