I can't help but feel this is for those that absolutely need the slim profile and better portability.
We had been waiting on the M2 Air to upgrade my wife's 2018 Air as she needs more internal SSD space (it only has 256Gb). However after seeing the prices of the new Air she has gone for an M1 Pro MBP 14" base model with 2TB SSD.
Here in the UK the M2 Air with 2Tb SSD and 16Gb RAM is £2400 vs base 14" M1 Pro MBP with same specs is £2500.
For £100 more you get the bigger and better XDR display plus a more powerful charger, along with better thermals and less risk of performance throttling.