That was my exact thought too. I'm an owner of both an Echo, and a few Echo Dots. The Dots aren't great for music, but the Echo is actually really decent.
The name is a big mistake (they should call it just "HomePod", and the larger one "HomePod Max / Studio". Right now they are forcing people to compare it to the $30 smart assistants by the other two. It's not evident from the name that the HomePod "Mini" isn't competing with the Google Home Mini or Amazon Echo Dot.
Google / Amazon / Apple
Low end:
Home Mini / Echo Dot / None, but people will think HomePod Mini sits here
Mid:
Home / Echo / HomePod Mini
High:
Home Max / Echo Studio / HomePod