This is targeting the same market as the original MacBook Air. Eventually, the Core M processors will improve (starting with Skymont next year) so that this can become the mainstream MacBook again in a few years, following the same pattern the MacBook Air took from January 2008 to July 2011.
I'm not sure I understand the criticism. It isn't as if Apple hasn't done this before. They know where they want to take the notebook, but the technology isn't quite there to make it mainstream. So they are releasing it as a niche machine alongside the existing MacBook Air and MacBook Pro lines (which will still be their top sellers) until it is powerful enough to replace one of them.
The difference was when the first MacBook Air came out there wasn't anything like it. A mainstream laptop that could fit inside a manilla envelope was unheard of. But this new MacBook? Less than half a pound lighter than the 11" MBA and less than 1/5 of an inch difference in thickness. Most people on the street probably wouldn't even notice the difference. If Apple had put a higher res screen in the MBA and waited for the Core M processors to improve before switching, then people would be less pissed.