Older iMac as a display

Both computers are too new. The limited hardware and softare requirements for Target Display Mode ("TDM") are in this Apple support article:

Use your iMac as a display with target display mode - Apple Support

Pertinent points to your situation:

• The last iMacs that could act as an external monitor for another Mac were the MID 2014 models
• The last Macs that could use a TDM-supported Mac as a monitor were made in 2019
• A new Mac shipped today will come with macOS 12 "Monterey." The last macOS that supported TDM was 10.15 "Catalina."

StylianChairo mentions Luna display. See this thread from yesterday, specifically Jack-19's useful information on Luna:

Using Mid 2010 24 inch IMAC as a monitorto late 2012 27 inch

Yeah I am almost in the same boat as you, I got and 2015 iMac and an M1 MacBook Air. Only way would be if it got Target Display but that's only available on 2012 models or older I believe. You could use Luna Display though, check it out.

It is a pointless restriction.

No one here will ever know if this was from lack of interest, changes to iMac display hardware, or something else. If you feel an Apple employee needs see your concern, use a feedback link:

Feedback - iMac - Apple

Apple won't see what you post here.

It's not a "restriction" as it applies to all of us; the feature is simply no longer there. Not there for only a few would constitute a restriction. It's an R&D deprecation decision.