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It does not apply any dark overlay, at least not on HDR screens, it just looks like it does due to the big difference in brightness.

I would assume the iPad Air 4 doesn't have a HDR screen, but maybe I'm wrong. On HDR capable screens you should still see a huge difference even on maximum brightness.

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Apple does some trickery to display HDR on non HDR Apple displays. Look up EDR.

On some post-2017 non-HDR Apple displays, the OS actually dynamically adjusts the screen's gamma curve to simulate this effect. On machines that support this, if you hold Option down while opening the Display control panel, there's an additional option that appears to enable/disable this.

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