Now they have probably hit the limit for the number of $1200 laptops they can sell, so probably want to broaden their market position (being careful not to cannibalise the number of $1200 laptops they are selling).
There is zero reason for me to have anything but the cheapest MacBook Pro/Air, in fact the smaller screen size mean I'm more likely to use it outside the office, meaning I get more use from it. I'm not allow to use it without a monitor an keyboard most of the time anyway, so for most hours of the day the screen size isn't important.
For Go, Python, shell scripting and admin tasks the M1 Air is perfectly fine and if they made a cheaper version that would probably cover most/all of my home usage.