I think from a consumer standpoint the Neo is great. A major company like Apple offering a value product that disrupts current offerings in that space is a great thing because it forces everyone to compete even more.
Let's face it, Google and MS OEM's don't have much competition at the low end. You either have a Chromebook for cheap or a decent compromised Windows laptop. For $600 you can get a decent Windows laptops but it will have some big compromises like screen brightness and color accuracy, plastic, etc. Generally you will still get more ram(windows) and storage(windows) but other specs suffer. Most all $600 Windows laptops have backlit keyboards and even $400 Chromebooks do. So the Neo is a good compromise device that is a lot better in terms of screen quality, build quality and performance and battery life. All in a very nice package.
I think it will force Google and Chromebook and Windows OEM's to offer more for less to compete. The problem is that generally the quality of Apple software is where things start to take off for Apple. A Chromebook can't really compete with a Mac even with Linux support and Windows has its pluses and minuses but in general most average non gamers will prefer Mac software. Add an iPhone or iPad and then the software gets even better.
All of this to say that now at the low end there is competition from a big player where it didn't exist and this only benefits consumers as the competition offers more for less.
This will inevitably flow up to the Air. In fact, I think that the Neo and Air stand to gain the most features to stay competitive and depending on your needs offer most people the most value and further segments the line into more distinctive categories. The air actually has a better position than it did before. I really wish they would just drop the air name and call it a MacBook.
Then you have the MacBook Neo, The MacBook, and MacBook Pro. Much cleaner line to me. Now make the base iPad the iPad Neo, replace iPad Air with iPad, and the iPad Pro. iPhone 17 N(e)o, iPhone, iPhone pro. I like symmetry.