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The battery health indicator will go down if you regularly don't use it on battery. Apple's documentation even says this in a round-about way in their support docs, and I can confirm that I have observed this behaviour.

Why? The "health" reading is the max the laptop will charge to (which can be either due to age, or due to the learned charging behaviour), which it will reduce like other third party battery apps to improve battery longevity.

Use it on battery a bit and the health will come up.

But at the end of the day - use it as you need it. If you don't use it on battery much, clearly you don't need the max battery capacity and so the Mac is reducing charge level to suit in order to reduce wear on the battery. Unfortunately this influences the battery health due to the way it is measured.
 
Here is the state with mine. As I've been told Apple only bothers when it reaches less than 80% in the "official" data.

This is a machine bought second hand from someone who hardly used it on battery, but when I received it the number was 99% health official data, 93% stat with 44 cycles. I find this weird, but as always hardware diagnostics found nothing.

I have seen some comments about Air battery not holding up as much as others, due to the number of cells. Maybe it is true?
 

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My MBA M1 was sitting at 99-100% for the first 8 months and then suddenly dropped to 93% for the past two months and has now been sitting there at ~60 charge cycles. Funny because I use Al dente and was limiting my charge to 80% and was really proud that I had maintained 100% health over the first 6 months.
I think Al Dente has made it worse for me. It drops about 3% per month. In 8 months after starting using al Dente, it got from 100 to 86%.
 
Third party apps like Coconut and Bettery Battery 2 use the ioreg value which fluctuates daily up and down. Because Apple don't want people reacting to these varying numbers they supply a different number calculated in some way which eliminates these fluctuations. When the Apple number drops to 80% they will take notice.

The Apple number (always the same in System information and Sys Prefs > Battery Health) is not the same as the ioreg number.

Not all models and OS versions have the Sys Prefs > Battery Health.

Here is my ioreg number after 53 cycles reported by Better Battery 2 since Feb, when I started using it (Machine was new in Nov 2020). My Apple Sys Info and Sys Prefs numbers are both 100%.

I have used AlDente since Feb to keep max charge to about 60% since I am mostly plugged in.

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And how has your battery capacity been affected?
I have the impression using Al Dente has been making my battery capacity worse. I too use the Mac mostly plugged in to an external monitor that only uses USB-C for both charging the laptop and transmitting audio-video
 
Battery health has not been great for me on the M1 Air. I have 82% of full charge capacity in Coconut Battery after 191 cycles. This is on a machine purchased Nov 20.

It compares quite poorly to other Macs I own.
 
And how has your battery capacity been affected?
I have the impression using Al Dente has been making my battery capacity worse. I too use the Mac mostly plugged in to an external monitor that only uses USB-C for both charging the laptop and transmitting audio-video

I have two M1 MBAs:-

The first was a Nov 2020 machine. Now 60 cycles. Al Dente installed Feb 2021. ioreg health 94.5%. Apple health 100%.

The second was an April 2021 machine. Now 21 cycles. Al Dente installed May 2021. ioreg health 99.8%. Apple health 100%.

Al Dente set to 60% max charge for both, but it sometimes strays over this during macOS installs, boots to Recovery etc.

I am very pleased with these, but have no way of knowing how much AlDente contributed. Batteries are not identical components like machined parts, so maybe I got lucky.

As I have said above, the ioreg health used by third party apps like Coconut and Battery Monitor goes up as well as down, as in my Battery Monitor graphs below. This is why Apple has their own alogithm for battery health. The sudden jump in December on the second machine is very odd. Really makes you wonder about the value of ioreg. OTOH there was an unplanned unfortunate event around then where the machine discharged to actually shutdown around then, but not sure of exact timing, so not recommending this!

72D37128-68ED-43D1-A098-2BAD459C37A9.jpeg8E331906-FBE6-41EB-A24F-D5ACCD1F1ED7.jpeg
 
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