I own a MacBook Air 13.3 M1, same 8GB RAM, but with 512GB storage, fully updated to the latest version of Sequoia, 15.4.1
I didn’t even recall Apple selling a 128GB storage model - I thought 256GB was the base model. Seems a bit tight, even in this “everything’s in the cloud” era.
For reference, I’ve owned it for probably four years, general all around laptop use, streaming video, but no video editing or gaming. This laptop still feels plenty snappy performance-wise. So I feel no need whatsoever to upgrade.
Just looked at the storage and I’m using about 100 GB of 512GB, with no house-keeping of obsolete stuff. The storage used actually fell a couple updates ago. It looks like the macOS + System Data together use about 57GB. About 16GB is used for applications and the rest of the 100GB is mostly photos, mail, and messages. So it seems like 128GB total storage might be doable, but don’t be expecting to keep a lot of user data on it.