Both RAM and SSD matter - yes, you can supplement the storage with external drives but the Mini isn’t supposed to be “bring your own drive” and there advantages to having at least the OS, applications and temporary files on the internal drive (and making sure it never gets close to full).What DOES matter is RAM. 24GB of RAM in base M5 machines would be very cool.
All that effort to make the Mini so small - then ensuring that many users immediately have to hang an external box off it to get adequate storage at an affordable price.
For starters, the M5 is going to use PCIe 5 for the internal SSD and Thunderbolt 5 is only PCIe 4 speed. With OS, apps and temp on the super-fast internal, many people will find that much cheaper USB 3.2 external or even a NAS is more than adequate for bulk storage. However, 256 GB is very tight if you install a couple of “pro” apps or games.
If you do want a TB5 drive with performance comparable to the internal one, that may be cheaper than Apple but it’s still eye-wateringly expensive.
Still, the 16/256GB Mini is probably OK for many. What would be cool is if getting 32GB RAM and 1TB SSD - a fairly pedestrian spec for a computer in 2025 - didn’t double the price of the Mini.