What does native DisplayPort output over USB-C mean?

According to MacTracker, that is a Mac mini with the base M2 chip.

Mac mini (2023) - Technical Specifications - Apple Support

You can connect up to two displays. You can connect

• One display via HDMI, USB-C (DisplayPort), or Thunderbolt
• One display via HDMI, and a second display via USB-C (DisplayPort) or Thunderbolt
• Two displays via USB-C (DisplayPort) or Thunderbolt

If you choose to do things the third way, there will be a lower maximum resolution on the second display than on the first. This won't affect the ability to plug in 4K monitors, but may result in fewer Retina modes being available on the second one.

Jacko Duker wrote:

how should I interpret the digital signal native displayport through USB-C

The USB-C connector is like a Swiss Army knife that can have many blades. DisplayPort Alt Mode is one of those blades. This is DisplayPort protocol, but on the USB-C connector. Thunderbolt Alt Mode is another one of those blades. Thunderbolt offers very high bandwidth, and can carry DisplayPort signals multiplexed with other signals.

Most third-party monitors do not need or understand Thunderbolt. They are either looking for USB-C (DisplayPort) input, or for some more traditional form of input that you can get by using a USB-C (DisplayPort) adapter.

Thunderbolt usually comes in

• When you have a monitor with unusually high resolution, like the 27" Apple 5K Studio Display or the 32" Apple Pro Display XDR
• When you plug a Thunderbolt dock, hub, or adapter into your Mac. This can let you plug two regular displays, with resolutions of 4K @ 60 Hz or less, into the same Mac host port, via the Thunderbolt dock.

Here, Thunderbolt provides a wide "data highway" to carry video for one very-high-resolution display, or for two more typical ones.

Jacko Duker wrote:

can I add one display via TB4 to HDMI and add one physical via USBC to displayport and one direct on HDMI.

If you are asking if a M2 Mini with the base M2 chip can support three displays

• One connected via HDMI to HDMI
• Two connected via USB-C (DisplayPort) to HDMI

the answer is "No." The M2 Mac mini has three ports to which you can attach monitors, but a limit of two displays.

I’ll need one physical display

two virtual displays via videomixer.

I'm not sure what "videomixer" is.

There are features in macOS to let you create virtual screens in software, and switch between them.

Work in multiple spaces on Mac - Apple Support

yes the standard thunderbolt is a thing apple and intel developed which is a serial multiplex of displayport signals and pci-express signals along with hdmi it's how one connects displays to macs that has thunderbolt connectors

it will of cause not alter how many displays you can connect to the mac that is set by the gpu part of the system on a chip (m2)