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It was perfectly fine on my M1 Mac + Thunderbolt 3 / DisplayLink dock for 2x1080p@60. You could feel slight input lag and a hint of judder in video games but for video and office work you wouldn't be able to tell it wasn't native.
I had a similar experience with a couple of Dell USB-C docks. The "good" one was as you describe, although I was running higher resolution displays, so games were off the table, and the slight input lag you saw while gaming, I could see while doing office work. Way too annoying. The "bad" one was just unusable. That's what drove me to the external enclosure with Thunderbolt, which I am now using with three displays, two at 1920@60, one at 2560@144.
Yeah, it was Dell D6000. I switched to a single big monitor while my gf is using my old setup for remote work and she's never noticed anything off. We're also using some Lenovo DisplayLink docks in the office and those are ever so slightly laggier but still OK for that type work. Obviously it's a bit of a niche case and last resort for personal use but I wouldn't write them off wholesale.