iMac M3 Peripherals waking up during sleep

Great, thanks for updating. Not to be picky, but displays are turned off either by software or manually and computers sleep (if set to do so or manually). Technically this difference is important especially for troubleshooting issues.

Whether it’s Sleep or Display off on timer, the Mac sends a command to the display to turn off. The headset light is confirmation that the display unit still has power but has been commanded remotely to turn only display functionality off. That doesn’t mean the headset works - it gets its audio from HDMI which is blocked for all functions.

I of course don’t mean to correct you but take the opportunity to simply share my knowledge.

Sleep is unnecessary on later Macs and should be disabled. Shut for long absences/idle overnights, and for regular operation, use the settings exactly as shown below (reboot after setting):

Also, do not manual-sleep for brief absences, use instead the Lock Screen settings to switch the display off on timer:

Once set, you can also use Control-Command-Q to immediately lock your screen (instead of waiting for the display to switch off on timer).