If anything, it seems that Apple's much larger product - the iphone - had a lot more to do with M1/M2 design than high end desktop equipment. On package DRAM is common in cell phones to reduce board size. And M1 is a scaled up A series SoC. I think it's a great product for Apple. But as someone who's supported Mac, Linux, and Windows machines at a university for a decade, it doesn't feel appreciably different from Intel NUCs over that timespan. AMD's 7840U is setting a new standard for power and performance on the PC side right now. And the two will continue to leapfrog.
"Sweet spot" is exactly right. It's not the best at anything but the best balanced that I've ever used, by a huge margin.
I don't think it's magic either and I hope that Intel, AMD, Microsoft, Google, Nvidia etc. can deliver a similar package in a future laptop. For now though they seem hopelessly behind, at least among the products I've used.
Also, among those companies, Nvidia is the only one I'd trust to do a decent end user experience. Maybe Google to some degree, but they'd end up sunsetting the product after a generation or two.
Microsoft tried to do the same with the Surface line, but every single one I've used sucks. The tablets are way too heavy and clunky. The laptops overheated and couldn't even charge while playing games. Windows has a ton of ads.
Apple's integration of all the things really makes it a standout in today's commoditized and enshittified world, IMO. It's not just tech specs but how the product feels to use at the end of the day.