For all people wondering, I think the following analogy would help to understand components.
1) CPU: Apple M1/M2. CPU is a brain of the computer - faster processors can calculate more data in 1 second versus other CPUs.
It has single core performance and multicore.
Single core - almost 90% of your day to day is only done on a single core. So naturally the CPU with the highest singe core score(calculations per second) will be faster.
For example app opening is a single core, exporting video/photo is a multi-core.
Limitations: CPU solves calculations that you provide to it. It gets them from the storage room (RAM).
Lets say CPU is a mover and RAM is a truck. You are at unloading deck - you need to understand where is your downtime is coming from: is it either your truck is small and you have to drive 3 times back and forth or is it your movers are slow because physically unfit/lacking in quantity or lack accessories to increase speed.
2) RAM: acts like a storage room.
Limitations: You can have 16 wheeler parked at your dock but only 1 man offloading it - think about 64GB of RAM and old intel CPU from 5-10 years ago. For given purpose, regular van and 2 people could be faster for your case even with multiple trips - less RAM(8gb) but better CPU(think old intel vs new M chips) with multiple compression/swap sessions.
3) SSD: is the size of your dock.
Limitations: You can have fast men, fast and big trucks - bit it all fails if your dock's offloading door is 6 feet wide.
SSD speeds decrease when full by 80-100% as well as their life expectancy. Swap would not kill your SSD, but having only 10GB free and rewriting it constantly would kill it eventually - your full ssd keeps the data and your swap will be writing at the same 10gb of cells again and again.
In conclusion, all components should match in the power/ability to each other. At one point some of the three will give up on you performance wise and will bottleneck you: your job is to understand who is slacking and update that module.
My history:
1) Dell XPS 15z: dual core+fancy GPU, 4GB of RAM, 5400 rpm HDD for 500GB.
HDD: the whole system was beefed up, but the bottleneck was 5400rpm slim hdd - it gave 45-75MB read/write speeds, while clearly my RAM and CPU were hindered and stopped by slow HDD.
Resolution: 6 month into owning, shell out $240 for an SSD with 500MB read and write speeds and 128GB capacity. 10 times faster SSD - ok, so now startup time went down from 60 seconds to 10 seconds on empty machine, from 2 minutes to 15-30 seconds on full of software machine. Clearly bottleneck is recognized and improved experience.
RAM: 2 years into owning, they present new windows update and suddenly my system ran out of RAM and everything felt slow, minimizing software would take forever. When previously fine, i was using 3.4-3.7GB out of 4GB, while after heavy updates it was 4.5GB-5.1GB out of 4GB, so clearly 500-1000MB into swap.
Resolution: ordered 8GB sticks. Nothing changed much, but the computer stopped lagging and my usage was below 7.2 GB out of 8GB, so RAM was not bottlenecking my system anymore.
CPU: all else equal, computer started lagging. I have new RAM and SSD as described above, so tinker my CPU stats - it is overheating at 103C degrees. Replaced thermal paste + extracted ton of trash from vents and radiators under the hood - yeah i loved using it on a bed. Temps went to 65C and computer stopped lagging.
2) rMBP 2012 - dual core, bad intel GPU, 8GB of RAM, 128GB SSD.
CPU: right out of the box the whole system flies and I could not be happier that i do not have to tinker with buying parts like on windows machine. No issues here.
RAM: never had issues with 8GB of RAM, tapping under 3GB into swap the laptop felt responsive, when using 3GB+ of swap it lagged - but it was rare occurrence to really use 3GB+ of constant swap, so RAM was not an issue.
SSD: albeit very fast, it was only 128GB. The last couple years it was using 119GB out of 123GB available. Sometimes system crashed because i had 0 MB free memory on SSD. No real solution, just tried to tought it our and run lean until next computer.
3) 2020 17 inch gaming Lenovo laptop - 6 core CPU, fancy GPU, 16GB RAM and 1TB SSD.
CPU: Very fast and has a lot of headroom. For example my old Mac was opening Adobe products 30-60 seconds, this thing opened them in 8s-15s. Impressive.
SSD: Regular fast SSD - 15 second boot up time no offense here.
RAM: when heavy pushed, constant use of 12-13GB out of 16GB, while not pushing it was around 8GB. Most of the time I would see 8-9GB of RAM usage.
4) M1 Air 8gb/512gb - impressed that this thing worked 16hrs(lenovo dies in 4hr) and provided the same speeds across the board.
CPU: opens adobe in the same 8s-15s as my monster gaming lenovo laptop. Big props to apple here.
SSD: is pushing around 3000MB read/write speeds, so I never had issues with any SSD that gives more than 700MB speeds.
RAM: works fine 100% of the time with no Lags - i saw beachball maybe 2-3 times in 3 years into ownership. Windows with 16GB is noticeably faster if minimizing apps - for example in Windows i could easily play a heavy game, minimize it to do my work, open the game back. This is not going to work with 8GB Air without noticeable lags, but it is not needed for me that is why i went with Apple and returned Lenovo.
Opening regular apps and minimizing works perfectly fast on 8GB Air - it is milliseconds slower than 16GB Win laptop, but it is really splitting hairs here.
MacOS: Early release of Monterey made my laptop lag and freeze 80% of the time with yellow/red RAM pressure.
Resolution: identified faulty MacOS rather than RAM issues so rolled back to BigSur - solved my RAM issues, which further proves that it was not a ram issue as suggested by initial investigation.
5) M1 Pro MBP 14 - 16/512gb.
CPU: as fast as M1 Air.
SSD: probably pushes about 6700MB which is 2 times faster than Air but absolutely not noticeable.
For reference, your regular tasks only need speeds of 500-700MB per second to operate at requested power -browsing and opening files, so 10 times faster SSD would not help anything here.
Lets say opening an app requires reading 10GB of data, but your CPU can only process 1500MB per second. This equals 10gb/1.5gb per second = 6.7 second is the fastest your CPU can open the app if not hindered by SSD/RAM. In this case, SSD provides 6GB of read speed, so it could have been 10gb/6gb = 1.7 seconds to open the App, but it is not happening cause we are capped here by CPU speeds.
RAM: It eats the same amount as 8GB Air, regular load - under 8GB usage, medium load - 8-9GB, heavy load - 12-13 GB.
MacOS: despite 16GB versus 8GB air, it was lagging with basic outlook web app when sending emails using browser. It would also constantly lag while scrolling forums.
Resolution: Updated to latest Monterey from earliest, now it never lags. Issue was not RAM, CPU or SSD - it was a raw MacOS as usual.