Why can't I use my iMac as a monitor?

Yout M1 is too new. The issue is laid out in the system reqs for TDM that are in the article you came from, linked above your name:

Also note the iMac acting as external monitor cannot be running higher than macOS 10.13. Yours appears to have 10.15. You can downgrade the iMac to High Sierra but you cannot downgrade the M1 to an Intel processor or Catalina.

Target Display Mode was discontinued years ago.

You can attach an older DVI or VGA monitor (there are plenty around), I do and it works fine on my M1 iMac.

Don't forget that Apple will recycle your old iMac if you have environmental concerns.

You can share your feeling with Apple.

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