How is this a "very balanced machine" it actually does less than its predecessor, although faster
The reason it's not priced higher other than the fact it's been put in a 3 year old case is Apple will know given current sales climate what the market can handle to achieve their goals of encouraging both users and developers etc to migrate to ARM
That too is a factor. But I don't think they are "too" concerned with that. After all, in the current situation they raised the price of the base (non-mini) iPhone 12 and the base iPad Air. But I am not disagreeing, that must be a factor they consider.
Regarding the first question, yes, it does less but it does it better. I think that the things it cannot do are not important for most users. Apple was incredibly smart (by 'smart' I mean *************) in cutting support for 32-bit intel in Catalina, so they didn't have to write two translation layers for the M1 while still being able to say that M1 Macs run the vast majority of Mac software!
Updated intel Macs ALSO don't support 32-bit intel anymore! In other words, Apple gave a major blow to intel's strongest advantage (compatibility) just a year before switching to ARM. And fanboys even praised them for doing so!! Apple IS evil. 😃
In the coming months compatibility will improve rapidly, the most significant thing you lose is native windows, which is important to me and other people here, but in my daily life I don't know anyone else who uses windows in a mac, except a couple of people who occasionally run it in a VM.
When I say "balanced" I mean that the base configuration of a Macbook Air, the one most non-tech people buy, is a good product. It has all the necessary specs to serve an average user well: light, portable, very long battery life, good screen and speakers, very fast and (rare for Apple) adequate RAM and storage.
A Surface Pro 7 is still sold, in its base configuration, with 4GB of RAM and 128GB of storage. An i5 Surface Pro 7 and the base Surface Book are fanless devices, even though they overheat and throttle like crazy! A Surface Laptop Go in its base configuration has 4gb of RAM and 64GB of slow, soldered storage. By the time you upgrade it to have decent specs (emphasis on "decent", not good), it almost costs like a Surface Laptop 3 (WTF). These are what I call unbalanced machines, overall quite good, but each one with some major flaw.