Extensions are moving away from the macOS kernel
Kernel extensions have long been one of the most powerful and dangerous features of macOS. They enable Apple and third-party developers to support the rich range of hardware available both within and connected to Macs, to add new features such as software firewalls and security protection, and to modify the behaviour of macOS by rerouting sound output to apps, and so on. With those comes the price that kernel extensions can readily cause the kernel to panic, can conflict with one another and with macOS, and most of all are a security nightmare. For those who develop malicious software, they're the next best thing to installing their own malicious kernel.
For some years now, Apple has been encouraging third-party developers to move away from kernel extensions to equivalents which run at a user level rather than in Ring 1. However, it has only been in the last year or so that Apple has provided sufficient support for this to be feasible. Coupled with the fact that M1 Macs have to be run at a reduced level of security to be able to load third-party kernel extensions, almost all software and hardware which used to rely on kernel extensions should now be switching to Apple's new alternatives such as system extensions. This article explains the differences these make to the user.
A good, detailed look at what Apple is doing with kernel extensions in macOS.