“how many displays can I have connect with the laptop closed because I can have one monitor with laptop closed and charger connected”
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Unless you want to buy additional hardware and download and set-up a new app, the M1 MacBook Air can natively only support one external monitor via physical connection. I say it that way because you can use Sidecar with an iPad which would give you the ability to have two external monitors with or without the laptop lid being open.
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