For me the longer software support would play a role in my decisions. The M1 MBA will probably lose support in 4-5 years whereas the Neo has a longer road ahead.

Combine that with the enormously improved single core performance (which matters more in the real world than sustained load for an entry level notebook), fun colors and 499 price tag for students and I can see the interest.

The screen is good compared to the MBA (only loses P3 colors) but the bummer seems to be ports and the "normal" trackpad.