To be honest I don’t know if M1 has hardware level virtualization support (like the VT-d or AMD-V extensions). You would imagine it would at least for security sandboxing, but Apple doesn’t do a whole lot of first party virtualization - and if they don’t need it they aren’t going to fool with adding it.
I know hypervisors can work without it, and at least one third party hypervisor does exist on M1, I just don’t know if there are various degrades in performance associated with it.
On the plus side - apparently you can virtualize most ARM distros