Well, for one thing, the old entry-level Air had a 2-core i5-8210Y ($281-$393 "recommended customer price" according to ark.intel.com) so the relevant update would have been the 10th gen, i5-10210Y at $292 - which, thanks to the march of progress, now has 4 cores. But instead of using that and giving us a 4-core, entry MBA at the same price as the old 2 core, Apple have gone downmarket to a 2 core i3-1000G4. Intel haven't published the price of that yet, but here's betting it's cheaper.
Not saying that's a bad thing - the new chip may well be ideal for the job. It's not like the Mac Mini where they pulled the same trick (expensive mobile-class i5 -> much cheaper desktop-class i3) and increased the price...
Also, the "generous" SSD capacity bump is probably because 64GB chips are falling out of demand (so they get expensive) and replacing 2x64GB with a single 128GB chip knobbles the performance.