I would extend further to say, the current "setup" of wipe and restore while the original user accounts still persist must be an oversight. In what scenario would a total restore that already delete all user data and system settings would have the user expecting the user accounts to be intact. The irony is not only the accounts stay, but they are invisible to the user upon setup and setup assistant comically tells you the same user names cannot be used twice, lol.
It seems to me the change in how macOS behaves in the firmware / kernel level for Apple Silicon has led to this state. The underlying security enclave, boot protection etc are all departure from the EFI scheme in Intel Mac era. Perhaps the user credentials are stored securely inside a sort of ROM that a volume wiping wouldn't delete that portion of the system, by design. But when in recovery mode the user is already surely wanting to purge even user accounts then this "resetpassword" step should be already baked in the process. Along with a few major bugs that Big Sur is currently experiencing, Apple will need time to iron all these out.