Not an M1 owner, but did Docker not work properly under Rosetta?
It's likely that a lot of the mac-hosted docker tools and UI stuff
would run under Rosetta - but the actual docker engine only runs on Linux - the docker package for Mac creates a minimal virtual machine running Linux. The Intel version of Mac Docker was obviously set up to run an x86 VM running an x86 Linux system - which is not something Rosetta can fix.
Fortunately, Docker for Mac had already switched from using VirtualBox to using MacOS' built-in hypervisor which, I guess, uses much the same API on M1 as it does on Intel (although it is dealing with ARM64 VMs instead of Intel) - hence the relatively prompt appearance of docker on M1. Otherwise Docker would be waiting on M1 versions of VirtualBox/Parallels/VMWare (far more complicated products than the minimal VM Docker needs).
Still, running M1 binary images rather than x86
will be an issue for some users - but Linux, Docker and most of the important open source projects were all over ARM64 support before Apple Silicon was even announced - helped by the whole open source thing - and if there isn't an ARM binary of what you want there's a fighting chance that you can build your own - or find someone else who has.
With all the interest from Amazon, MS etc. in using ARM in the server/cloud world, pretty soon developers are going to need to simultaneously deploy to both ARM and Intel anyway - so one of other of those will either have to be done by cross-compilation or on a cloud instance....
I mean, if you're paying your mortgage building, testing and deploying x86 images at the moment, you probably shouldn't dash out and buy an M1 just yet - but it will be a couple of years yet before Apple start depreciating x86 support and you
have to switch, and that's a long time in IT. Personally, I suspect that running a local VM for Docker-style web/server development will become increasingly irrelevant when you can just spin up an exact clone of your production server in the cloud. It's not like you can get far in modern development without an internet connection - and it's the VM that benefits from having fat pipes to your data sources, image repositories etc. elsewhere in the cloud, not the IDE running on your laptop in Starbucks (er, sorry, your self-isolated home office).
