I'll make an educated guess. (For a definitive answer, you'll have to ask Apple.)
First, let's distinguish between USB-C (DisplayPort ALT mode) displays (which don't need Thunderbolt input), and Thunderbolt displays (which do). DIsplays that actually connect via Thunderbolt are pretty rare, although you will find many descriptions of USB-C (DisplayPort ALT mode) cables and adapters that mention Thunderbolt. Usually this is because the vendor is trying to emphasize that the product will work with Macs - not because the products rely (or should rely) on Thunderbolt. Vendors don't always make this clear (and I suspect that the marketing types who write the advertising copy may simply not know!).
I don't know if Apple Silicon Macs support daisy-chaining DIsplayPort displays. There is an optional feature in the DisplayPort specification that allows for this, but Macs never supported that feature in the days of Thunderbolt 1/2 (which had Mini DisplayPort connectors and could pretend to be Mini DisplayPorts). They still may not support it. That's an issue on which Apple's technical specifications and user support documents appear to be silent.
With respect to Thunderbolt displays, I believe that Thunderbolt can carry two encapsulated DisplayPort sessions. If you had two Thunderbolt monitors, and either of them had a resolution of 5K or 6K, it would need both sessions for itself. In that scenario, you'd need to attach the Thunderbolt monitors to different ports. I don't know whether a Thunderbolt hub (which splits one chain into several) could help you with that resource contention issue.
If both of your monitors were Thunderbolt monitors and had resolutions of UHD 4K (3840x2160 pixels) or less … and at least one of them had two Thunderbolt ports (to allow daisy-chaining), I think you could daisy-chain them. Each would consume one of the two DisplayPort sessions within the Thunderbolt signal.
Someone else can correct me, if I'm wrong, but this is the impression I've formed from my reading.