I just found an old thread on this very topic, but during the M2 era:
Even I myself was among the one discussing but I already forgot about it. The discussion is chaotic but we did get to the root of the problem, as per BetterDisplay release notes:
- Maximum flexible scaling resolutions depend on GPU capabilities and the display's resolution (horizontal width limit is 6144 pixels for entry level Apple Silicon Macs, 7680 pixels for the Pro/Max/Ultra versions).
This statement seems to be still relevant and true with the base M3 chip. Therefore we really need our hands on the M4 chip, running macOS, to confirm if the new display engine has indeed upgraded this specific bit about frame width.