Julian Day wrote:
Am I missing something? I bought the iMac second hand to act as a larger screen for my MacBook.
How are you using it as a larger screen?
Although the 2011 iMac can act as a Thunderbolt Target Display for some other old Macs, Apple placed restrictions on Target Display Mode. Your M1 MacBook is too recent to support using any iMac as a Target Display.
See the bad news here: Use your iMac as a display with target display mode – Apple Support
As for AirPlay to Mac (a lower-quality way of using a Mac as a display), the 2011 iMac is far too old to support being an AirPlay Receiver. You might be able to AirPlay from the iMac to the MacBook Pro, but that is the reverse of how you have things set up.
See the bad news here: Continuity features and requirements for Apple devices – Apple Support
I suppose that you might be using Screen Sharing. That isn't meant to be a substitute for a real hardware monitor – more a way of letting you use one Mac to view and control the screen of another Mac on your network.
As far as resolution controls for screen sharing, see if there is anything in: Apple Support – Mac User Guide – Share the screen of another Mac