TL;DR Formerly unusably-slow for backups a few years ago, the built-in Target Disk Mode in Macs has actually improved in latter-day Intel models (using a Thunderbolt 3 cable), now nearly 1/2 as fast as an external USB-C drive dock.

My test: use Carbon Copy Cloner v5.1.22 to clone an internal SSD with 690GB of data. “Find & replace corrupted files” is OFF*.

Source: Macbook Pro 16″, Catalina 10.15.7

Destination: 13" 2020 Intel MBP, Catalina 10.15.7, in Target Disk Mode, using a 40G Thunderbolt 3 cable.

Result: Direct-connect two MBP using a high-speed Thunderbolt-3 cable was 5.9 GB/minute, about half as fast as backing up via USB 3 to an SSD in an external drive dock (12 GB/minute).

Keep in mind that two “trips” are required if the goal is to move the data to a new Mac via an external SSD (first from source -> external SSD, then from external SSD -> target)… so when you add the time it also takes to restore the external SSD to the target Mac (which I did not measure), the net time difference between the two approaches is less.

For my purpose, simply cloning Mac#1 to Mac #2, the direct-connect using Target Disk Mode was simpler and adequately-fast. YMMV.