Although an M1 chip is no longer necessary, Stage Manager cannot be used with an external display.
Stage Manager, a completely new multitasking system that adds overlapping, resizable windows to the iPad, is probably the largest update Apple revealed with iPadOS 16 earlier this year. The first time an iPad could do anything other than mirror its screen on a monitor was with that capability, which also functions on an external display. The 11 and 12.9-inch iPad Pro models that were released in May 2021 as well as the iPad Air that was powered by the M1 chip were the only iPads that could use the feature, which is a bummer. Other previous iPads were not included.
With the recently published iPadOS 16 developer beta, that has changed. Apple has now made Stage Manager compatible with a number of earlier gadgets, including the 12.9-inch iPad Pro and the 11-inch iPad Pro (first generation and later) (third generation and later). In particular, it will be offered on the 2018and 2020 models that don't just employ the M1 chip but also the A12X and A12Z chips. However, Stage Manager will only function on the iPad's built-in display, thus there is one noticeable feature that is absent from the older iPad Pro versions. You won't be able to connect an additional monitor to extend your display.
Additionally, Stage Manager for M1 iPads no longer supports external display compatibility, according to Apple, which has been a feature since the first developer beta of iPadOS 16 was released a few months ago. Later this year, a software upgrade will reintroduce it. It makes reasonable that Apple is taking a little more time to continue working on Stage Manager given that some members of the iPad community have been rather vocal about problems with it, especially when using it with an external display.
Stage Manager will obviously need to be tested on an older iPad Pro before we can comment on how well it performs, but the A12X and A12Z chips are still be than capable, so ideally the experience won't differ from that of an M1 iPad. Although it's disappointing that external display compatibility isn't included, those who recently purchased one of Apple's most costly iPads should still be happy to hear this.
The following comment from Apple on this update was issued to Engadget:
With the capacity to run up to eight live apps on screen simultaneously, Stage Manager was presented as a brand-new way to multitask with overlapping, resizable windows on both the iPad display and a separate external display. It is only possible to deliver this multi-display capability with iPads that have the full power of M1 processors. Customers with iPad Pro models from the third and fourth generations have expressed a strong desire to use Stage Manager on their iPads. In response, our teams have been working hard to develop a single-screen version of these systems that will enable up to four active apps running simultaneously on an iPad.
In a software upgrade later this year, Stage Manager on M1 iPads will allow external displays.