The andwer is very simple. After 5-6 years (if not earlier) macOS version compatible with these M1 macs will stop receiving updates. Hence the only safe way to continue uding them will be to install Linux, or other OS that will still receive updates. Virtualisation inside the, then unsupported/unpatched version of macOS, does not help you in this respect.
So, as as a result, this means fast obsolence. Needles to say, that is quite bad news for the environment, and for the owners of those machine, sadly :-(
If solely just using macOS as a Hypervisor just how wide is the sercuirty hole here. For example the latest Security Bulletin.
This document describes the security content of macOS Big Sur 11.0.1.
support.apple.com
Most of those are non kernel applications. If the virtual machine software doesn't use those then is no vector. Even the parts where there is a kernel issue it often is "Malicious application ..." .. Well on the hypervisor framework there is no MacOS application running. I suppose if load up a compromised OS to host and it exploits the kernel there is a problem ... but the security horse already left the barn .. the OS being hosted is compromised.
Apple's hypervisor needs some substantial work. They need to add the ability to add/map a physical device to a specific hosted OS ( so give the host OS its own private Ethernet controller. ) so that it is isolated from the hypervisor/kernel normal code also.
If the user stops making updates and using the underlying macOS instance and pragmatically just air gaps it... the overwhelming vast majority of the security problems disappear if get off the Internet and stop installing new software. ( if don't let people in then no problem to mitigate).
Essentially can abandon macOS in place . Big iron IBM mainframes and power systems never run any OS that is installed for user interaction "raw" on the ha.rdware. The "boot" process is always run on top of a small hypervisor layer. What Apple is missing if they want to go on this path is a scaled down pragmatically hypervisor only version of macOS. Not exactly like, but something akin to HyperV . Apple has a new "system recovery" image they have squirreled away hidden on the system.
In short, if Apple is going to put a lot less effort into the infrastructure around Boot Camp then they need to put all that effort level and more into the hypervisor. Right now, t it is a bit of doing less work and also less work over both. ( at least from the outside view. ) . The hypervisor framework isn't that different than it was several years ago.
If Apple is going to point 100's of thousands of folks at this this hypervisor ... it needs to be substantially better if they are going to completely cut off boot time OS image options. Apple can make the choice to cut that off for security reasons, but that shouldn't be a "free lunch" to do less work. There is just other work to do.
That problem won't resolve itself if folks just ask Apple to open back up what Apple thinks is an security vector problem. The two sides will be talking past each other and probably nothing will get done over the long term.