I have several USB hubs and docks (USB hubs with things like card readers, HDMI output, Ethernet ports, USB-PD (Power Delivery) pass-through, etc.) All of these hubs and docks work fine on an Intel MacBook Pro running Big Sur, never had any issues with any of them. Yet all of them are failing in one way or another on an M1 MacBook Pro running Monterey (12.3.1).
What usually doesn't work is USB-3, no matter if USB 3.0 (5 Gbit/s, aka 3.1 Gen 1, aka 3.2 Gen 1) or USB 3.1 Gen 2 (10 Gbit/s aka USB 3.2 Gen 2). These ports do have power but no device is working plugged into them. If they do have USB 2 ports (480 Mbit/s), these do work most of the time (a bit unreliable but I can always get these to work). What sometimes does work are USB-C ports, yet it's kinda random if they will support USB 3.x speeds or just USB 2 speeds. HDMI output seems to always work for me, card readers and Ethernet usually works but I found both to be unreliable (e.g. sometimes Ethernet seems to work but cannot ever obtain an IP address using DHCP and when assigning one from hand, nothing is ping-able).
It makes no difference if these are active or passive hubs/docks. If they are active, they fail, no matter if powered by an external power supply or not. It also makes no difference if the PD pass-through is being used or not to pass power to the MacBook.
When plugging an USB 2 stick into an USB 3 port and then un- and re-plugging the hub/dock to the MacBook multiple times, sometimes it starts to work as expected, as the port correctly works at USB 2 port in that case but even that is random. It always works well for real USB 2 only ports.
So my conclusion is, that the USB 3.x implementation in Monterey is somehow seriously broken and cannot correctly support USB 3 hubs. It explains why USB 2 only ports are working correctly as an USB 3 hub must include an USB 2 hub for USB 2 functionality (these two USB versions are strictly separated Hub-wise, see USB 3 standard). It explains why HDMI works, as it's not transported via USB protocol at all (it's transported via USB-C cable but uses dedicated lines on that cable just for that purpose). It explains why sometimes card readers work (as they are internally connected via USB 2 in some cases) and why Ethernet is unreliable (it is using USB 3 but may be able to fallback to 2, yet this can be an issue if you have a Gbit-link but the port is only connected via 480 Mbit/s). And it explains why plugging devices directly into the USB port with any hub in between does work just fine, as in that case no hub support is required.
As the MacBook has internal hubs, apparently the implementation can handle some hubs correctly and if you are lucky and your external one behaves exactly like the internal one, it seems to work, so very few hubs seems to work okay but the majority of hubs does not. And again, these hubs work perfectly fine on older MacBooks, often even on newer ones if the still run Big Sur, as well as on all PCs with Linux and Windows I've tested them with.
Yet 3 major Monterey updates later and almost a year after the first Monterey Beta that already showed this problem, Apple has still been unable to fix this serious issue. Note that this is the second time in the history of macOS where Apple totally messed up the USB stack of the system. There has already been an update (I don't remember which macOS it was) that broke USB 2 functionality in such a way, that many devices completely failed after the update, especially multimedia devices (sound cards, video sticks, and so on). I remember that incident as I was developing USB device drivers myself at that time.
