M1 Macbook Air battery health 86% after 192 cycles. Is that okay?

You can interpret that any way you wish. My 2016 MBP has 39 cycles and is now showing 90%.

It was set up in a desktop role at first. For almost 4 years its cycle count was below 10. Yet the battery degraded normally. Had it sat in the DT role for 10 years, the battery would her eventually dropped below 80% with a cycle count still at 10.

There is no direct correlation between cycle count and capacity.

True- but batteries don't age in a linear fashion. The battery health fluctuates quite a bit over the course of their usage.

As stated, I would wait until it drops below 80%, at which point you should get it replaced. Until it gets to that point, don't worry about trying to anticipate or predict it.

From where are you getting this information about battery health? Third-party apps sometimes give different readings on battery health, so you should use the Battery pane in System Preferences to get this information.

Check the condition of your Mac notebook’s battery - Apple Support (IE)

You can also try to prolong the lifespan of your battery by turning on Optimized Battery Charging, and on macOS Monterey and later, you can turn on Low Power Mode while your Mac is on battery to extend the battery life.

For context, my MacBook Air with M1, purchased February 2021, has 93% maximum capacity after 226 cycles, so yours definitely appears to be going more quickly than usual. If your MacBook's battery health is reported as "Service Recommended," you can take your Mac to Apple for a battery replacement. If your battery is reported as "Normal," you'll have a harder time getting service from Apple. Regardless, you'll be out $129 US for a battery repair if you don't have AppleCare+ on your device. (Repair prices vary by region).

Mac Repair - Official Apple Support

"I know that battery health should reach 80% after 1000 cycles."

That's a misinterpretation. There is no direct correlation between cycle count and capacity; 1000 is simply a max estimate.

My 2016 MBP had been at 89% for the last two years; it was 92% just yesterday. The capacity reporting is not perfectly stable and it can plateau at a given level for a long period of time.

When you get to 80%, you'll need to service the battery. Until then don't dream up problems that don't exist, charge it when needed, use on battery when you need to and enjoy it.

Your battery is not defective; it's out of warranty anyway. All batteries lose capacity over time but that can be mitigated by letting the battery circuitry take care of the battery. Be sure optimization is "on" and leave it there.

This is purely anecdotal, but I've always found the readings in Settings to be a bit weird. On my iPhone, it was 100% until one day it was 94%. My MacBook, on the other hand, was at 94% out of the box. Your MacBook might just sit at 86% for a very long time for no explicable reason.

If my calculations are right, my battery should reach 80% after maybe 250 cycles only, if not less.

A battery's maximum charge capacity rate of change is not linear and cannot be extrapolated. Your calculations are predicated on flawed assumptions, so no they are not correct.

What should I do? Should Apple replace the defective battery for free, or will I have to pay for it?

Apple will replace the battery under conditions stipulated in their applicable warranty.

dra3b wrote:

I think it loses 1% each month or so.

1% per month is fairly reasonable, actually. At any rate, Apple will only replace the battery for free if it falls below 80% capacity in the first year of its warranty. Beyond that, they make no guarantees.