It's weird because you're both right and wrong.

It's not AAA by any stretch. It was sold at a fraction of the usual price point, it's advertising was non-existant, and it makes no effort to do the usual AAA things: live-service, online multiplayer, "you can play it forever", etc. are are not present.

But putting it side-by-side with Manor Lords and Balatro, the latter of which was a single-person dev, also doesn't suit it. It has a real studio, a dev team with experience, and at least enough of a budget to license real music from popular (or at least, once popular) artists. I'd perhaps agree with your statement that it's closer to AAA than to a "small dev" game, but it is true that it's a "smaller game that [gives Microsoft] prestiege and awards".

This is a great article highlighting the pig-headed double speak going on at Microsoft's gaming divisions. On the one hand, they're cutting studios and supposidly refocusing on their core offerings, while simultaneously describing the experiences they want to offer as exactly the studios they just cut. The absolute worst part is I can't help but suspect that they're going to take the IP, push it on a different dev team that they control and give it the Fable treatment: "this IP was so well received; make a sequel that checks all these boxes that our market research data tells us popular, profitable games have" while conviniently ignoring the passion and vision that the original devs poured into the original title.