Despite hardware limits, Parallels supports running Windows on MacBook Neo

"8GB unified memory is the minimum practical configuration."

See full article...

 

[dmsilev]

It’s worth noting that Microsoft’s ARM to x86 translation engine (the equivalent to Rosetta 2) has gotten a lot better over the last several years, and that’s an important part of the viability of VMs both on the Neo and on Macs more broadly. You really can run useful x86 software on the ARM version of Windows, which essential since most apps don’t have ARM-native Windows versions.

 

[dmsilev]

The M-Series Macs always run Windows-on-ARM in the VM. The x86 translation is done by Windows.

From the article:

Parallels can run the x86 versions of Windows and Linux on Apple Silicon Macs, but the processor emulation required for that is even more performance-intensive than typical virtualization, making the Neo a bad fit.

So, you can do it the other way. It's generally a bad idea, but it's possible. I guess the reason to do it that way is if you had some x86 application that for whatever reason didn't work with Microsoft's x86->ARM translator.