This is just a device with higher margins to help Apple balance out tariffs and other inflationary measures. It has fewer cameras, smaller battery, less casing material, and the Apple designed slower modem. I'm sure there will be a few other cost cutting measures as well. Maybe Touch ID instead of Face ID? We'll see. But they'll charge more for it, positioning it as premium and thin, even though it's likely worse than the base iPhone in nearly every way.
It will probably sell reasonably well, and eventually Apple will turn the iPhone SE into the iPhone, and the Air will be the new standard model in the middle, once they are able to get 2nm chips and smaller into it and increase battery life somewhat to cover the 80-90% range. Then suddenly you're paying more for what is now the new standard iPhone with fewer features, or you can get the really cheapo base iPhone which will be even more behind by that point after it takes over the SE's role.
It will probably sell reasonably well, and eventually Apple will turn the iPhone SE into the iPhone, and the Air will be the new standard model in the middle, once they are able to get 2nm chips and smaller into it and increase battery life somewhat to cover the 80-90% range. Then suddenly you're paying more for what is now the new standard iPhone with fewer features, or you can get the really cheapo base iPhone which will be even more behind by that point after it takes over the SE's role.