This is fine and an excellent move. Google never had any interest in gamers (until the failure that is Stradia) so why would they put the extremely expensive flagship snapdragon SoC in their phones? Gamers buy the gaming dedicated phones. Google doesn't need flagship SoC for image processing because they will likely include their on accelerator chip or even use Sony's new sensor with an accelerator on the main sensor.
Google can either keep producing underwhelming "flagships" in an already saturated market, never gain market share, or they can make something affordable and sufficient for 100% satisfaction in 99% of users at half the price of a flagship and enjoy 4x more sales.
The Smartphone market is crying for a feature complete phone with no notch. If they can deliver 3.5mm and an SD card slot, this phone will be an absolute winner; a direct competitor to Sony's $1300 flagship with barely any downsides for 99% of users.
Let's not forget the Google software and updates premium and being a US company.