Macbook Air M1 - How to fix preventing Mac from sleep (windowserver and powerd)

When you close the lid, it sleeps- you do have choices though to tweak what sleeps. Click the battery icon at the upper right, near the clock- it should show you if there are any 'offenders' that are using 'Significant Energy'. You may have a running app that is not sleeping. Now click "Battery Settings" from that drop-down. You can see the battery level relative to 'Screen On' usage. Click OPTIONS at the bottom of that screen and you can choose to 'Wake for network access' on AC only if the issue is heavy network usage while sleeping. I have it set AC Only because for me, network usage is not important for me when I am not interactively using it.

I am learning the ins and outs of MAC myself, haven't found more detailed info on battery use, what processes are eating what resources... (Sorry but I think Windows does a better job showing running processes and what is hogging what).

Not sure what the reference to 'windows server' above means- are you running something that is using data stored on a Windows server? If so, and you wish that to stop while it is sleeping, to save power, then I would think that stopping network activity while sleeping would handle that, but whatever it is doing on/with the Windows server would also stop so you have to decide what is more important...

AAAH not 'Windows Server', for example, but the process windowserver that I see in Activity Monitor, along with the other processes you mentioned. It seems that something is running that doesn't want to sleep. Being a WINDOWS person at heart, I would reboot the computer, confirming that no apps have restarted on logon, and then check how well it sleeps, say overnight. Not every piece of software plays nice all the time, but the baseline is just the OS.

windowserverd, bluetoothd, and powerd are normal macOS background server processes. Under ordinary circumstances, you should not be doing kill -9 ("Force Quit") on any of them.

The trailing 'd' is a Unix/Linux naming convention. The 'd' stands for 'daemon' (as in a background server).

From the names, I would guess that windowserverd helps to manage GUI windows, that bluetoothd helps to manage Bluetooth devices, and that powerd helps to manage power-related things.