I have two Apple 27" Thunderbolt Displays connected to my 2020 MacBook Air, Display 1 is plugged into the MBA via a Thunderbolt to USB-C (TB4) adapter and the second 27" TB Display is plugged into the first. As you would expect, that works fine.
Today, I received my M1 MacBook Air, 16GB/512GB. Same configuration as above but only 1 display works. However, hard drives plugged into the display work, USB and FIreWire 400. Haven't tried a TB hard drive yet. Ethernet is also working. From what I've read, the only thing that MIGHT work, is getting a USB-C dock, and and adapter to convert the 2nd TB display to HDMI. That should/might work, but I'm sure none of the USB/FW/EtherNet/TB ports on the 2nd display will work. It would be really interesting to hear Apple's justification for what seems like a backward step. I've been running the 2 TB displays off several MBAs for probably 6 or 7 years. Now the latest and greatest MBA doesn't support this. Don't really want to buy a new display. Hopefully, a solution comes along soon that will allow this to work and all the ports to work as always.