I think it starts to make sense if you consider when MS likely began Series development in earnest. The One X didn't even launch until late 2017; then we got the Xbox & PS5 spec "leak" rumors early 2018 via the Github leak. We know the Surface team led development of the new Xbox consoles (or at least they were heavily involved), and the type of production mentality you criticize is exactly the type of mentality that's popular and sustainable in personal computing markets, plus it theoretically helped facilitate a Series X that could serve two roles at once (a regular home console, and an upgradable server machine via additional RAM & storage).
With all due respect, this isn't a personal computing market, it's a mass-produced electronic product. If MS thought it was anything other than that, then they have made a huge mistake.
Somewhere along the line, I think Microsoft thought they could translate that model to the console space, and if they kept the higher-end product at a lower volume, could control losses assuming the lower-priced system (which they would still be taking a loss on, but a smaller one I suppose) were doing good enough in sales and the service it was designed around, Game Pass, could grow substantially in revenue.
I agree with this. The Series X does feel more like a personal home server for gaming than it does a console. Especially with the lack of upgrades.
That said, this also meant Microsoft, IMO, probably had less than two years to actually design the Series consoles. IMO the reason they have "full RDNA2" is because they literally had to wait for AMD to finalize the spec, whereas Sony had more time with the spec & roadmap, and had more time to architect their system out (they never scaled down R&D funding for PlayStation the way Microsoft did for Xbox during the 2015 - 2017 period). That's probably one of the reasons the PS5 has more customizations in its design (and more significant ones, I'd say).
I think this has been proven. To my knowledge this is exactly what happened, to the point where MS were apparently trying to buy information on what Sony and Cerny were doing. However it backfired because the developments Cerny was bringing to the PS5 also helped AMD with their RDNA2 and 3 tech, so they told MS to FO
Genuinely feels like Microsoft only had maybe two years to get ready for this generation; they likely had plans for 9th-gen and were working towards them, but maybe those plans centered on something closer to a Series S? Then, after the One S & One X results, they decided to go with that strategy again for 9th gen, in Series S & Series X, and accelerated the architecture & design spec for the systems starting maybe sometime late 2017.
Unfortunately for them, results aren't validating that approach as being fruitful.
I believe they underestimated Sony (again!) and believed they would go for a cheap and cheerful mid-range console (even though sony have never done that). I also believe MS thought that Sony would keep the gen going on longer so that they could maximise the profits of the PS4, like MS did with the 360, which bit MS in the arse.
I reckon they did full R+D for the S and it was going to be the new generation, leaping ahead of Sony, as MS assumed they would ride the pro a little longer. This would give MS time to develop the SX ready for Sony dropping the PS5. However, the PS5 turned out more powerful than MS anticipated and MS threw together the X in quick-time just to compete. You can see this by how off-the-shelf the X looks and feels compared to the PS5 or even Series S.
Where MS really screwed themselves is not having a tech guy like Cerny on their team. Cerny knew about diminishing returns and through his feedback from devs and publishers (who asked for more RAM and throughput) he set to work on making those the priorities. So while MS went to play dick-dangling top trumps about TF, Sony made a throughput monster.
It gets worse for MS because the Series X cannot compete with the PS5 in graphics or RT, regardless of what the shills say, and the PS5 was built for VR from the ground-up. Within the next 12 months, you will see VR games looking better than anything on the Series X