Similar experience .
Bought a MacBook Air M1 4 days back and noticed significant difference in camera quality. Picture is very blurry. While doing a FaceTime with my wife, I found her picture quality from on older MacBook model to be far clearer than my new machine, which she also pointed out right away.
Another surprising issue is that whenever there is an LED light in the background, it interferes with the FaceTime camera lense and one can see a thick vertical ray of light running across the screen.
Surprising part is that on contacting the apple store and apple call centre, I was just given the response that “Apple is aware of the LED issue”.
The picture quality during FaceTime was so bad that I was thoroughly convinced that the camera is faulty. However service center executive maintained that it is not a hardware issue and also somewhat conceded that camera in the new machine are not that good and that there is nothing he can do.
It is really disappointing.