That Pluggable dock uses a DisplayLink chip.
A DisplayLink chip is essentially a GPU that has been stripped down to the bare minimum for running displays and connects over USB 3.0. (And relies on the main GPU in the system for doing the rest of the work)
This allows it to work even on systems that don’t normally support display output (in fact it can work on all 6 of the ports on the Framework 16, not just the 3 that support display output), however it does result in a bit of visual artifacting and latency. Many users have also reported stability issues with the DisplayLink drivers.
In my experience the Dell D6000, which uses the same DisplayLink chip as that, works well with most devices I’ve tried. I haven’t tried it with the FW16 but if you’d like I’d be happy to test it in a couple hours.