When I replace my beloved 2014 MBA (probably in a year or so), it will probably be with this new MBA. The low power CPU will not be a problem for me (iWork, Mail, Safari, Notes, Photos, Messages, and an occasional simple iMovie). I suspect the vast majority of laptop users are in the same boat. Here is how Apple is selling it on their site:
Performance. Your all‑purpose, all‑day notebook.
Even though it weighs just 2.75 pounds, the new MacBook Air packs quite a punch. An eighth-generation Intel Core i5 processor helps you power through daily activities, from reading email and browsing the web to creating Keynote presentations and editing in iMovie. Up to 16GB of memory lets you work seamlessly even with multiple apps open, while up to 1.5TB of SSD storage lets you launch apps in a flash and provides plenty of room for all your documents, photos, and videos.
So, for the traditional MBA customer this is the right computer. Long battery life. Touch ID. 13 inch Retina Display. Lighter weight. Lower price point than the rMB or ntb MBP. The name "Air" is irrelevant with respect to its size compared to the rMB. "Air" is significant because Apple has built an incredible loyalty around the MBA model with consumers of all-purpose all-day notebooks. They would be nuts to throw that away just to be more precise with naming convention.
The rMB is an ultra ultra portable for a niche market of people that travel a lot with their computer. The ntb MBP is for people how want more power, but can't afford the tb MBP. This is also a bit of a niche, and I think it is likely to be discontinued in the not to distant future. The MBA is the all-purpose all-day notebook.
Finally, how about the pricing? The MBA is still Apple's lowest priced new laptop. Introductory prices of new Apple products are almost always higher than their predecessors. The prior MBA was Apple's most popular laptop, and it had an 8 year production run. That is plenty of time and opportunity to minimize tooling and product cost. A new model is going to cost more. When the 2010 MBA was introduced 8 years ago, it was $1299. With time, the product got better (e.g. keyboard backlighting, thunderbolt 2, etc..) and the price dropped to $999. But, that took several years. We will probably see the price drift downward with this model as well....but it will take some time.