The Neo is the first Mac built around an iPhone processor, the A18 Pro, with 6 CPU cores and a 5-core GPU. The Air uses the M5, with 10 CPU cores and an 8-core GPU on the base model, plus extra AI hardware Apple calls Neural Accelerators.
In everyday use the difference is smaller than the spec sheet suggests. In heavy work it is large. Independent testing published this fall gave the Neo a Geekbench 6 multicore score of 8,920 against 17,067 for the 13-inch Air, so the Air is close to twice as fast when every core is busy. A video conversion test told the same story: the Air finished in 5 minutes, 8 seconds, and the Neo needed 9 minutes, 57 seconds.
For single tasks such as loading a web page, the gap is about 20%. The M5 also has more than double the graphics muscle, which matters for games, 3D work and video effects far more than for typing up an essay.
Memory is the bigger long-term issue. The Neo ships with 8GB and can’t be configured higher. The Air starts at 16GB and can go to 24GB or 32GB. Neither machine lets you add memory or storage later, so what you buy is what you keep.