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Actually it works fine on Steam Deck. It uses VRR over DP to the dock, which then translates it to HDMI with VRR. The dock has proprietary firmware to do this.
Intel and Nvidia hardware with open source kernel drivers also do a similar trick where the HDMI part is in a firmware blob. Only AMD does not work with HDMI VRR.
It would allow them to do HDMI FRL also, which is probably what you mean when you say HDMI 2.1. AMD cards also do HDMI FRL I thought. FRL is what allows things like 4k120Hz (higher bandwidth modes). The VRR that the Dock does is the VRR standardized with 2.1, which is why it works on TVs and devices that do not support freesync (see: LG TVs).
Anyway, the Dock doesn’t have a fast enough HDMI converter to do that. It’s not a licensing issue. Next gen Deck/Dock will probably do it.