Apple didn’t hide Portrait mode in macOS Monterey with M-series Macs, but it sure didn’t highlight it. This background-blur option appears only in Control Center and only when you have video input active. That can be a built-in camera in a laptop or iMac or in a third-party webcam.
With a camera selected in an app, click the Control Center icon in the menu bar. Note that a Video Effects option now appears. Click that tile and then click anywhere in the Portrait line to enable the mode. Notice that the background blurs slightly.
Note that you can also enable and disable Portrait mode in an active FaceTime session: the Portrait mode icon appears in your selfie video thumbnail preview. You can click the icon when your preview is minimized, or after clicking the preview to enlarge it if you want a bigger click target.
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