I had the same issue today (MBP 2016 worked well, MBAir M1 connected but with a black screen). After having talked to a very helpful support guy at Apple I tried to update the Dock using my HP Dragonfly. That did not work as the update assistent could not find the Thunderbolt version (the last option that is checked during the update process where all current and latest versions are listed).
Nothing helped using the Dragonfly. But I was lucky owning another HP laptop (EliteBook 830, I think). It probably does „only“ have a normal USB-C not a Thunderbolt port.
Well, using the EliteBook for update was pretty easy and was successful.
I used the update file from the HP homepage which was released end of 2020 (December 27th - LINK).
After the update I was able to connect my M1 MacBook Air, display was not black anymore and it works as it‘s supposed to.