No it's not reading out wrong data. Larger SSDs always consist of multiple NAND chips which are managed by ONE controller. This one controller maintaining the SMART statistics based on the data that goes through it. The SSD in M1 Macs also is nothing new in terms of technology, despite Apple displaying a fancy "Apple Fabric" name for the connection in system profiler and disk utility. It still is NVMe at its heart.
Also it has been ruled out already hat SMART stats are wrong for whatever reason. The SMART stats match what is being written to the disk accordin to the OS.
In addition, if the SMART stats were wrong, everyone would see those insane numbers. But that is not the case. Only a fraction of Mac users is affected by the high TBW issue and it isn't even limited to M1 Macs. Some Intel machines are affected by this as well.
It clearly is some kind of software constellation that is being the culprit here. If it's Apple's fault or some developers fault or both of it remains to be seen. SWAP usage however is not the cause.