"Second" monitor set to AirPlay mirror rather extended display.
I have a baseline M1-Pro Macbook Pro that I've been using for a while with 2 external displays. The Macbook itself sits on a dock in clamshell mode and it's connected to a CalDigit TS4 dock.
I have 1 main display, which is an LG C2, connected to the dock using a CalDigit thunderbolt to HDMI adapter. The "second" display is a cheap portable display connected to the same dock using an USB-C cable.
For some reason, after updating to 15.3, the Macbook now detects the portable display as the main display and sets the LG as a secondary display, which now behaves as if it was using AirPlay.
The "Displays" screen seems to be fine, but the menu bar shows the same icon as when it's mirroring through AirPlay. If I unplug the portable display, the LG works exactly as expected, but I loose the second display.
I found another user with a similar situation here, but since they seem to have an M1 Macbook Air, which is not supposed to support 2 external displays, people are blaming their Belkin dock. I don't think this is the exact same situation as I don't have these limitations, neither my dock can be blamed. I use this exact same setup for about 2 years now without any issue, so it MUST be related to the latest update.
MacBook Pro 14″