TorqSmith / Parallels, Boot Camp and virtual machines
Why Parallels and Boot Camp do not work for Fanatec
The short answer: running Windows on your Mac does not help. On Apple silicon there is no Boot Camp, ARM Windows has no Fanatec driver, and the emulation mode that could run the driver cannot pass a USB device through to it. The gap is architectural, not a setting you have missed.
Boot Camp: Intel only
Boot Camp was Apple's supported way to install Windows natively on a Mac, and it depended on the Mac being an x86 PC underneath. Apple silicon Macs are not, and Boot Camp was never ported. On an M series Mac there is no Boot Camp Assistant and no way to boot Windows on the bare metal.
If you have an Intel Mac, Boot Camp genuinely does work for Fanatec software. That is the one Mac path that behaves like a normal PC.
Parallels and virtualised ARM Windows
On Apple silicon, Parallels Desktop, VMware Fusion and UTM all virtualise Windows 11 on ARM, because that is the only Windows that can run at native speed on an ARM processor.
Windows on ARM includes a very good x86 translation layer, which is why most Windows applications run unmodified. That layer works on user-mode programs. A driver runs in kernel space alongside the kernel itself, and Windows will only load a kernel driver built for the same architecture as the running kernel. Fanatec has never published an ARM64 build of its driver, so on ARM Windows there is nothing for the system to load.
The practical symptom is that the installer appears to succeed, the Fanatec software opens, and the wheel base is simply never detected.
Emulating a whole x86 PC
The natural next idea is to emulate an x86 machine rather than virtualise ARM, so that the x86 driver has an x86 kernel to load into. That runs into the second wall: in that mode USB device passthrough is not available. The emulated machine has no way to claim the physical base attached to your Mac, so even a correctly installed driver has nothing to talk to.
Remote and cloud Windows machines
A cloud PC cannot see hardware plugged into your desk. Configuration and firmware flashing both need a continuous USB connection to the base, so remote desktop, cloud gaming and borrowed virtual machines are all out for the same reason.
What does work: skip Windows entirely
The wheel base is a standard USB device. It does not need Fanatec's driver to be talked to; it needs something that speaks its protocol. macOS can open USB HID devices directly, with no kernel extension and no driver install, which is exactly what TorqSmith does.
That is why a native Mac app can read and write your tuning menu when an entire virtualised Windows install cannot. It is not working around the driver problem, it is sidestepping the driver entirely.