How do you came to this conclusion when both are passingly cooled and A19 Pro is faster. Not to mention AV1 and other newer codec hardware accelerator and NPU / GPU improvements.
Also remember M1 MBA is may be Walmart and US only. Around the world most dont even get a chance to buy M1 at $599. The display dont have P3 but is actually brighter than M1 400 nits. Not sure how Keyboard is worse. Neo also have 1080P webcam rather than 720P.
And if Walmart is selling M1 at $599, I am sure they will also sell Neo at lower than RSP may be even same as educational discount $499. And this point surely Neo would win?
What a lot of people dont talk about, and may be wait until iFixit to confirm. Neo is basically the iPhone 17 of MacBook. It is perhaps the easiest to repair and cheapest MacBook for Apple to services.
I had an M1 MacBook Air and just set a Neo up for my niece. If I had to pick between the two for myself I'd choose the Neo again.
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.
I know many people who would not care about the differences you have outlined and gladly pay $499 for the Neo.