2017 4K, 5K iMacs won't support Target Display Mode, despite Thunderbolt 3
Apple has definitively stated that new 2017 iMacs will not support Target Display Mode, a feature that previously allowed some iMac models between 2009 and 2014 to use their built-in display as an external monitor for another Mac connected via Mini Display Port or Thunderbolt.

First supported on the Late 2009 27 inch iMac, the feature provided a convenient way to turn an iMac's internal display into an external monitor, and ostensibly served as a way to prolong the life of the machine after the computer itself grew obsolete. However, if there is a real component failure that stops the Mac from working, Target Display Mode would also fail.
The feature was continued in the Mid 2010 refresh of the same model, then extended across the iMac lineup between releases in Mid 2011 and Mid 2014. However, the feature was not supported in the Late 2014 5K iMac, apparently due to the fact that a single Thunderbolt 2 cable could not drive the full resolution of the new ultra high resolution display. No iMacs since have supported Target Display Mode.

Target Display Mode in action
With the recent release of new 4K and 5K models supporting Thunderbolt 3, which does have the bandwidth to drive a 5K (5120x2880) resolution, 10 bit display with 1 billion colors, the obvious question was whether Apple would revive the feature.
However, an Apple spokesperson told AppleInsider that 2017 iMacs are not designed to support Target Display Mode, and clarified that the feature is not planned to ever reappear. An Apple support page describing the feature, dated March 2017, also states that "iMac (Retina 5K, 27-inch, Late 2014) and later iMac models can't be used as Target Display Mode displays."
There are other ways to emulate the hardware trick in order to stream the display of one computer's desktop on another machine, but Apple's hardware based approach offered a true monitor-quality use of the internal display.

First supported on the Late 2009 27 inch iMac, the feature provided a convenient way to turn an iMac's internal display into an external monitor, and ostensibly served as a way to prolong the life of the machine after the computer itself grew obsolete. However, if there is a real component failure that stops the Mac from working, Target Display Mode would also fail.
The feature was continued in the Mid 2010 refresh of the same model, then extended across the iMac lineup between releases in Mid 2011 and Mid 2014. However, the feature was not supported in the Late 2014 5K iMac, apparently due to the fact that a single Thunderbolt 2 cable could not drive the full resolution of the new ultra high resolution display. No iMacs since have supported Target Display Mode.

Target Display Mode in action
With the recent release of new 4K and 5K models supporting Thunderbolt 3, which does have the bandwidth to drive a 5K (5120x2880) resolution, 10 bit display with 1 billion colors, the obvious question was whether Apple would revive the feature.
However, an Apple spokesperson told AppleInsider that 2017 iMacs are not designed to support Target Display Mode, and clarified that the feature is not planned to ever reappear. An Apple support page describing the feature, dated March 2017, also states that "iMac (Retina 5K, 27-inch, Late 2014) and later iMac models can't be used as Target Display Mode displays."
There are other ways to emulate the hardware trick in order to stream the display of one computer's desktop on another machine, but Apple's hardware based approach offered a true monitor-quality use of the internal display.

Comments
They would do well to tell us more than what they have so far.
But now that I know it can be, I'm disappointed that Apple (especially since they don't sell their own display anymore) has discontinued the feature.
Apple couldn't seem to get 4k working for much of the latest Sierra release, and then there are the LG monitors, so has the MacOS feature set become too complex to resolve annually...?
Target adds the capability of two (or more) simultaneous workflows using more than one mac, including an iMac server that doubles as a monitor, or a high end rendering iMac that can be checked upon while work continues using a Macbook using the iMac display(s) - this seems beyond the notion of using an older iMac as a monitor, to increase productivity...
This was the brilliance of Jobs (potential of X-grid?) vs the suggestion of decline of pro support so widely read across the web - Apple just doesn't seem to offer pro flexibility from a 16gb limit on the macbook pro to the utterly proprietary and inflexible components on almost all (including 'trash can') but iMac ram...
Is 5k really so much better than 4k? Is it worth all the proprietary inflexibility and inefficacy ? As always pros and cons: diglloyd.com/blog/2017/20170107_1234-evaluating-images-pixel-density.html
Of course non-apple monitors routinely have multiple inputs - unfortunately where my dollars have needed to be redirected, not by choice but for professional workflow benefit & efficiency...
Sticking with Mac Mini (would really like a new one), because my monitor needs to do double duty as an xBox display.
This is is a huge disappointment.
The fact is that target disk mode was used by very little. It was a nicety, but not a necessity. There's a lot of engineering that goes into making something like Target Disk mode work for very little return. This could also be a limitation of Thunderbolt technology where it just might simply be not worth putting all kinds of time and effort into it.
Its called a Mac mini...nobody buys it. Got anymore bright ideas?