Like a few other people, some of whom write about it on the Internet, I've always loved the idea of a Mac mini that was the size of an Apple TV. Not necessarily for any overwhelming reason, but it sounds like The Future, and would be cool.
As there was chatter about it this week, there have been some inevitable pushbacks too - not enough ports, higher cost, the-old-one-is-fine-why-change-it arguments. But given Apple can now push the people who want a desktop towards the Mac Studio, and offer many ports there, the smallish form factor desktop seems to be covered.
If Apple are actually making a smaller Mac mini, then it feels more likely that it will be USB-C only, have no internal power supply, and offer little in the way of other ports other than maybe HDMI and slightly less likelier, audio output. Which would put it quite squarely in the home cinema bracket. But then, Apple has the Apple TV - so even with the mini having a VESA bracket, I'm not convinced that would be a use case they would use.
Maybe with a VESA mount, it would make it easier to stuck on the back of a monitor, but then if you want an all in one, they have the iMac. This would at least be more upgradable by dint of swapping the computer part out at least.
I liked the idea of having a small, light Mac I could fling in a bag and take to work, to run off another monitor, but they have laptops for that now, and after years of resisting, I finally gave in and bought a personal MacBook so I can do work things that the Windows PC they force me to use is incapable of. (Like anything involving computing).
So then, what would this new Mac mini be for exactly? I think it's just the natural evolution of a computer. It will be smaller simply because it can be. There have been a flood of cheap (and I really mean cheap) Windows PCs based on Alder Lake (and other Lake) processors that sell for between £100 and £150 and they are perfectly adequate if you just want a home computer and have no ambitions beyond some surfing, email and letter writing.
Putting a Mac mini that's as basic as it can be up against these is really just a new entry level. The Alder Lake PCs are attractive because they're a marvel of 'how can something that small be that good', truly tiny, are seriously cheap and that's about it really. An M4 Mac mini in a new form factor would satisfy some of those too and make people who might have gone for a Mac mini if it wasn't so gigantic.
I doubt very much Apple cares about competing against £150 devices though.
The only semi-plausible use case I can think of is that instead of taking a MacBook with a relatively small monitor attached, what if you could take a Mac mini and a Vision Pro and have remote computing with a gigantic monitor but a super light computer that fits inside the same case the Vision Pro does? The case has got to be over-specced for a reason, right?
(I could do some clickbait and call this 'Why the Mac mini will save the Vision Pro from Extinction' and change the title to someone wearing a Vision Pro screaming, but I really need to get on and do something useful.)
Otherwise though, the main reason they could be making the mini smaller is because they can and it's cool so why not?