USB Hub recognized as external display, but connecting a display to the hub does not work

A USB-C hub can support a single DisplayPort signal from the Mac, when the hub can keep as DisplayPort, or convert to HDMI, DVI, VGA.

Any USB-C ports on your USB-C hub will just be USB 3 ports. These USB ports may support 5 or 10 gigabits/sec USB, but those hub USB ports will not also propagate the single DisplayPort it got from the Mac. A USB-C hub gets just 1 DisplayPort and the hub would have split that off to a specific video port.

If this were a Thunderbolt dock, then it would be able to support multiple displays, and if it then had a Thunderbolt out port, that would allow you to plug in your DELL monitor.

I have a CalDigit Thunderbolt 3 dock, and I can plug in my DELL Q3219U 32" 4K monitor's USB-C cable into my Mac, or the CalDigit Thunderbolt 3 output port. But I cannot plug my DELL into one of the CalDigit USB-C output ports, because they are just USB 3.1 gen 2 ports.

The next time you post a screenshot of the About This Mac pane block out the serial no. of the Mac. That's not something you want out there. Consider it like your personal info, i.e. SSN, mother's maiden name, etc.

Does the hub have an HDMI port or other video-only port?

If it does then it sounds like the Mac is seeing that video port as a display.

You also said "However, when I switch the Dell monitor from being connected directly to the laptop to instead using the USB-C hub, the display does not recognize the connection.."

For some hubs not all ports work with Monterey. It seems to be dependent on the chips in the hub. Since many hubs are just rebranded ons it is hard to tell what is inside just base on the label on the hub.