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As far as I know, it's worse, it renders at 200% and downscales.

macOS draws only at 1x or 2x. 3x is iOS only.

Apples decision to support only integer scaling was what allowed them to adopt Retina displays very quickly. Unfortunately it led to a subotimal solution in the long term.

That's just how to do it. You scale extra information down. Anything else doesn't work outside of vector based formats.

It also applies to text, which is vector-based (and which usually constitutes most of what's on the screen!).

it actually looks great on the LG 5k giving you 2880 pixels across and there's no significant performance hit w a M1 macbook air.

It's still provides subpar image quality and is wasteful, even if the M1 won't audibly complain. I'd never use it.