All the commentary seems to be accepting framing of the situation as a "over max brightness" band you can access when they're just dimming normal content. Brings to mind the business with doubling pixel sizes with the 4K displays and requiring tricks from apps and web content to access the native resolution.
The measurement shows that SDR content goes up to 500 nits (which was the peak value of previous MacBook displays as well) while HDR content goes up to 1607 nits.
If we have a monitor that has a brightness of 1600 nits, and whites of some content ("sdr") shows up much dimmer, the pixels the monitor is asked to display by the systmes are dimmed relative to max brightness - no?
But people usually look at this, relative to previous displays, not relative to peak brightness (since the peak brightness is not achievable for prolonged periods of time because of overheating)
Yes, the system monitors the display temperature and caps the brightness accordingly. Here are some interesting functions I found related to this inside the system frameworks: