Apple is aware of an issue with M1 Mac ultrawide monitor support where macOS does not show supported resolutions. The company has posted a new support page on its website which gives a workaround on how users can see the missing ultrawide resolutions.
The support page also notes that a permanent fix for M1 mac ultrawide display resolutions will be available in a future macOS update.
Apple is working on M1 Mac ultrawide monitor resolution fix in future macOS update
If you connect an ultrawide or super-ultrawide monitor to your Mac with Apple M1 chip, some resolutions supported by your display may not be available.
Apple is aware of this issue and resolution is planned for a future macOS update.
For now, Apple has shared a workaround that allows users to see additional resolutions:
To see the additional resolutions for your external display, choose Apple menu > System Preferences, click Displays, then press and hold the Option key while you click Scaled.
Apple is currently beta testing macOS Big Sur 11.2 with developers and public beta testers. At the time of writing, the beta update does not contain a fix for this issue but it is likely that the final will ship with a fix for this issue.
Even though M1 Macs have received a lot of positive reviews, there have been some issues reported by users and Apple has been fixing them with macOS Big Sur software updates. Recently, macOS Big Sur 11.1 was released with a fix for iPad and iPhone apps not working in full-screen on M1 Macs, and 4K resolution fix for LG UltraFine 5K Display.