I personally use a 16" 2023 M2 Max MBP maxed out and it is honestly god like.
However a good friend of mine uses the latest M2 powered Air with 16GB RAM and a 1TB SSD (the 24GB upgrade so a stretch too far for him) and I have to say it is a damn good machine and I could use it without much trouble. It doesn't throttle nearly as much as you would think for a fanless unit. Obviously it isn't as fast and he does hit swap when under a heavy workload whereas I am yet to hit swap but I also have 64GB vs his 16GB.
So to answer your question. Yes I think the Air is an excellent development machine for 'up-to and maybe a little over' a "heavy-medium" development workload. If you're doing a lot on the machine then you will hit its limits for sure but if you're just running Xcode and a simulator or two, etc. or PyCharm and docker, etc. you will be just fine.
If you're doing anything GPU heavy it isn't a great option but other than that I highly recommend it.
However I suggest you look at the total price once you add in 24GB RAM and more SSD storage (at least 1TB imho) vs the 14" MacBook Pro. There isn't a huge difference between them yet the 14" Pro is basically as good as my 16" for most things. Especially if you can find a good returned unit on sale cheap via the Apple Refurb store. The machines are as good as new, same warranty, etc. Well worth checking out.
16GB base would be nice but given Apple wanting to keep the entry price as low as possible I can't see it happening for a few more years. On the plus side I do find the 8GB unified memory design makes an 8GB Apple Silicon system "feel" like a 16GB Intel/AMD system in terms of memory use. It isn't identical and you can notice the difference at times but an 8GB Windows/Intel laptop such as a Dell XPS side by side with an 8GB MacBook Air and the Air feels a far better machine over all when using it normally.
However a good friend of mine uses the latest M2 powered Air with 16GB RAM and a 1TB SSD (the 24GB upgrade so a stretch too far for him) and I have to say it is a damn good machine and I could use it without much trouble. It doesn't throttle nearly as much as you would think for a fanless unit. Obviously it isn't as fast and he does hit swap when under a heavy workload whereas I am yet to hit swap but I also have 64GB vs his 16GB.
So to answer your question. Yes I think the Air is an excellent development machine for 'up-to and maybe a little over' a "heavy-medium" development workload. If you're doing a lot on the machine then you will hit its limits for sure but if you're just running Xcode and a simulator or two, etc. or PyCharm and docker, etc. you will be just fine.
If you're doing anything GPU heavy it isn't a great option but other than that I highly recommend it.
However I suggest you look at the total price once you add in 24GB RAM and more SSD storage (at least 1TB imho) vs the 14" MacBook Pro. There isn't a huge difference between them yet the 14" Pro is basically as good as my 16" for most things. Especially if you can find a good returned unit on sale cheap via the Apple Refurb store. The machines are as good as new, same warranty, etc. Well worth checking out.