OK, I think I have it now. Let me give it one more shot
:
For most displays, both Apple and non-Apple, Apple's current default is integer scaling. That's because non-integer scaling causes some loss of sharpness. For instance, here's the default scaling for the four displays I currently use (by "UI" I mean what Apple calls "looks like"; and "scaling" effectively means "UI magnification relative to native"):
2014 MBP, 2880 x 1800 native, 1440 x 900 UI => 2x scaling
2019 iMac, 5120 x 2880 native, 2560 x 1440 UI => 2x scaling
Dell 27" 4k, 3840 x 2160 native, 1920 x 1080 UI => 2x scaling
Dell 24" WUXGA, 1920 x 1200 native, 1920 x 1200 UI => 1x scaling
However, exceptionally, for the displays on the 2016 and later large MBP's, Apple decided it wanted to shrink the UI from 2x magnification to ≈1.7x magnification to get more info. on the screen. [They may have done this for other laptops in their lineup as well, IDK.] Specifically using the 15" models as an example, they achieved a 1.7x magnification by switching their default UI from 1440 x 900 to 1680x1050, which works out to 2880/1680 = 12/7 ≈1.71x scaling. This non-integer scaling caused a loss of sharpness, but Apple decided they preferred that trade-off.
The reason they've moved to 254 ppi in the M-series MBPs is it allows them to get the smaller UI they desire, while being able to employ the preferred integer scaling. Specifically, 2x scaling on 254 ppi will yield the same UI size as what would be obtained with 221/254*2 = 1.74x scaling on the 221 ppi 15" MBP, i.e., only slightly larger than the default 1.71x.
Thus ppi does matter if you have a target UI size, and want to maintain integer scaling.
Given the above, does this suggest to you that Apple might want to move all its high-end external displays to 254 ppi?
Initially I thought it did. I.e., I boldly (foolishly?) predicted that the 27" mini-LED/ProMotion(?) display rumored for the end of 2022 will be 254 ppi instead of 218 ppi (that would provide some additional product differentiation to help justify higher pricing vs. the 27" Studio Display), and that the rumored 7k XDR replacement will be 32" (254 ppi) instead of 36" (218 ppi).
However, upon further consideration, I'm wondering if it's only for the smaller (laptop) displays that Apple thinks this lower UI magnification is needed. After all, there's not as much need to shrink the UI for the larger displays, since they're much less space-constrained (and would also typically have a longer viewing distance).