I just got the update to Parallels Desktop for Mac v26.1.1 and tried to install the VM tools package in my VM. I use an ARM64 install of Gentoo Linux in my Parallels VM. I know Gentoo isn't directly supported. I saw in the VM release notes that the Parallels tools no longer needed a kernel module. This is great! But I was disappointed that I wasn't able to see my Shared VM folders anymore. After some troubleshooting, I came upon the problem and found the solution. Running some of the Parallels tools in Linux using strace I was able to see them try to open a socket using AF_VSOCK. That's something called a "VM Socket" which I guess is used to communicate with the VM presumably so it can get the Shared Folder configuration. I had never heard of that kernel option before.
If you compile your own Linux kernel, that option is called VIRTIO_SOCKETS and is configured under the kernel source menuconfig at Network Support -> Networking Options -> Virtual Socket protocol -> virtio transport for Virtual Sockets. If compiled as a module, the module is called vmv_vsock_virtio_transport. You'll have to make sure that module is loaded.
Once I had that option enabled in my kernel and loaded the module, my shared folders came back.
If you compile your own Linux kernel, that option is called VIRTIO_SOCKETS and is configured under the kernel source menuconfig at Network Support -> Networking Options -> Virtual Socket protocol -> virtio transport for Virtual Sockets. If compiled as a module, the module is called vmv_vsock_virtio_transport. You'll have to make sure that module is loaded.
Once I had that option enabled in my kernel and loaded the module, my shared folders came back.