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Target Disk Mode on Modern Macs

Target disk mode allows a Mac to make its internal disk available to another computer. This has been a useful feature for many years, but it works differently on Apple Silicon Macs than earlier models. These instructions tell you how to do this...

Shut down the Mac you want to act as a disk.
Connect the two computers with a USB, USBC, or Thunderbolt cable.
Press and hold the power button until you see "Loading Startup Options".
Click Options, then Continue with an admin password.
From the menubar, select Utilities, then Share Disk.
Click the disk you want to share.
Click on "Start Sharing".
On the other Mac, in the Finder, click Locations (in the side bar), then Network.
In the window, double-click your M1 Mac that is sharing disk or volume.
Click "Connect as", select Guest, then click Connect.
The disk from the first Mac should appear on the desktop.
You can now transfer files to/from it.

When Finished

Eject the disk when complete.
Shut down sharing on the first Mac.
Unplug the cables.
Restart the first Mac normally.