The keyboard on the MB takes some serious getting used to (actually, in the ~8 months that I used that computer, I never became fully used to the keyboard), but the screen and physical size of the MB was better than the MBA. (Of course, the processor was noticeably slower... so YMMV.)
So IMO, they did the right thing, there was too much overlap between models. The MB still needs to get faster and come down in price, but I do think it will be just as ubiquitous as the MBA within a few years.
I agree with others that the current line up is sorely lacking an affordable laptop, but that will likely change (slowly; hopefully) as manufacturing & component costs come down.
Apple should have a mid priced laptop for casual users.
Yes, there are those dedicated few who would prefer an 11" over a 13" model but, still do advanced computing on it but, those people aren't enough for a market.
Apple is letting the low end of the market get gobbled up by Google like they have everywhere else. Chromebooks now dominate in schools where Apple used to shine.
That isn't even to mention the effect of advanced mobile apps have had on our need for low end computing. Even the differences between 2012 and now is pretty stark. There is basically an app for everything that a casual user would do on their computer in a mobile device and that syncs up to the web. Google Docs, photo editing, light video editing and now what people mostly do is browse the web and consume various kinds of content online and games.
There simply isn't the market for a small laptop like there used to be.
Lastly, with a 20% reduction in volume with the 13" MBP, the distinction is more or less gone. The only thing is the price-point. There is nothing to fill that void.
Right because no one who wants a cheap laptop also values their privacy or wants to have control over their documents.
Even worse, the last time I used a Chromebook two years ago, I couldn't even create a local user account without Google's consent. On a machine I supposedly owned.
I like ChromeOS itself, but as configured, it is a user hostile operating system.
Well, the new MB is only 12". It's just not small and cheap.
But seriously, they make good hardware. They've never tried to win on price.