https://wiki.archlinux.org/title/Multiseat
It sounds like you need a second video card, rather than two monitors plugged into the one card.
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I assumed this was possible, would be very handy for having multiple sessions running
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It is possible, but it is not a wayland limitation per-say but a compositor one (aka the wayland server), and I say "limitation" if the compositor doesn't have multi-display option.
Technically wayland is not the issue:
If you look at your /run/user/[uisd] (uid is probably 1000) you will see the wayland "displays" (socket here), usually named wayland-X. The /run[...] is usually set from $XDG_RUNTIME_DIR while the wayland socket to be used is set in the environment variable $WAYLAND_DISPLAY. So running an application in a 2nd session would just require setting the $WAYLAND_DISPLAY to an other value (that exists).
It seems that Sway is able to do this with the output command.
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