While the Studio Display is 5K, the default is to display 1440p (which is then pixel doubled for "retina" or whatever). Confusing, what the Neo is supposed to be limited to outputting?
Nope. This 1440p and "pixel doubling" stuff is terribly misleading and doesn't happen outside of ancient apps that don't fully support retina mode. It's not helped by the silly way that Apple labels the resolution options on a Mac.
(A) Unless you go menu diving and option-clicking for low resolution modes "2560x1440" (used to be "looks like 2560x1440" but Apple dumbed down even further) means "5128x2880" with fonts, UI elements
smoothly enlarged so that they appear the same
physical size as on an old-school pre-retina 1440p @ 27" iMac - but with twice the detail. The image being sent from the computer is always 5k and the
content of your (retina-capable) apps should get rendered and displayed at full 5k resolution.
(B) If you connect a full-blown Mac to a
4k display and choose "1440p" mode then the Mac effectively renders it as 5k internally and then the GPU downsamples it to 4k (usually 3840x2160) and sends it to the display. Again, this makes the UI elements the same physical size as they would be on an old 27" 1440p display - but the level of detail is considerably higher than it would be at "real 1440p" but (obviously) less than on a true 5k display. Because this isn't a round 2:1 scaling factor the result is slightly soft and blurred around fine detail but these issues are
massively overhyped by people who have gone looking for the problem.
(C) Alternatively, with a 4k display, you can choose "(looks like) 1920x1080" which is really full 4k mode, again with fonts and UI elements smoothly enlarged exactly x2. This is sharper than "looks like 1440p" and preserves 1-pixel details but the result is that the system fonts and icons are rather large and eat a lot of real estate. However, the actual content you are working on can still be freely scaled to get decent "real estate" esp. if you hide the menu/dock etc.
(Sorry if that's grandma's egg-sucking lesson to some people, but the world seems to be divided between people who don't know how Apple's complicated and misleading scaling works and people who
do know but assume that everybody knows too. Complicated thing is complicated...)
With the MacBook Neo it's not yet clear whether the limitation is the GPUs ability to render internally at 5k (unlikely since even Macs with grotty Intel iGPUs have been doing this since forever) and/or the display interface/USB-C port not supporting the DP1.4 data rates needed to send a 5k image or the SD simply not supporting that in non-Thunderbolt mode (more likely).
Now, since Apple have explicity said "4k" it sounds like the Neo is going to be sending a 4k image to the display and the
display will be
upscaling this to 5k. That's not going to be as good as the internally native 2:1 or
downscaled image you get on a 4k display
but it could still be good - the Studio Display has plenty of horsepower to do smart interpolation.