To be fair and honest, 799$/799€/799£/₹79,999 is actually fine overall when you consider… everything. A bit overpriced but true flagship doesn’t necessarily have to be powerful and feature-rich all around, it just has to be premium across the board.

Snapdragon 8s Gen 4 is actually well in-between the 8 Gen 3 and 8 Elite, using the modified version of the former’s CPU and cut-down version of the latter’s GPU. Its die is smaller so it’s cheaper, and it’s down-clocked compared to either chip means it no less efficient than 8 Gen 3, provided the optimizations. (4nm and Kryo cores makes it less efficient than the Elite’s 3nm Oryon). The newer chip, like 8 Elite is, provides more headroom for software updates, explaining (3)'s above-average software support. Besides, as Carl Pei suggested, who but the most hardcore users do want more power? Even a similarly-priced Pixel vanilla or normal-size Pro models (sub-6.4-inch ones) have Google Tensor which are even weaker.
The camera are larger, with larger sensors and extra processing power. Aside from the shrinking of the telephoto sensor (compared to (3a) Pro), everything is improved (yes, even the front camera). Whether or not it’s improved enough to fully justify the extra premium over all previous models are subjective to your eyes and taste, but one thing is certain: the image quality, on both photos and videos, are noticeably improved.
The only thing anti-flagship (I would’ve called sub-, but this is a hated change I noticed) about the display is that it’s LTPS, not LTPO like previous models. This appears to be a cost-cutting measure and costing the display efficiency, especially around the variable refresh rate which now only ranged at 30-120Hz instead of 1-120 that LTPO would. The rest of the display are clearly flagship-level though.
The design is out there, unique to Nothing but all over the place technically. The camera layout is very weird, and looks ugly, but the rest of the design are fine. The metal rail, transparent back with plastic panels, even the little red recording light, are all nice.
USB 2.0 but 65W of wired charging - but you guys wanted at least USB 3.0. Guess what? 1) iPhone 16 and 16e has only USB 2.0, and 2) people are primarily using the port to… y’know, charge the phone. Also, the battery is actually 5,500mAh (larger than Samsung and iPhone and most non-Chinese flagships) and has silicon-carbon technology; it’s reduced to 5,150mAh outside of India because of the extra shipping cost.
Gorilla Glass 7i instead of Victus is the only questionable cost-cutting measure; in addition to what I explained earlier, the under-display fingerprint scanner aren’t focused on as much as before, and while the phone is quite heavy (218 grams), these aren’t as heavy has stainless steel framed phones.
Phone (3) starts at 256GB, not 128GB like its contemporary competitors, both mid-ranges and flagships. The full-LED display that is the Glyph Matrix also adds some more cost. And besides, Nothing OS barely has any bloatware.

You’re getting a whole package, and while Nothing Phone (3) may seem underpowered/under-spec and overpriced - it may appear to be merely a higher-end mid-range than the true flagship it’s touted and priced to be - but when you think about it, it’s not as simple as it looks. There’s a reason why Nothing chose such compromises at such price. They’re doing their own way (they’re still trying to be anti-iPhone, for starters), and (3) is meant to be the cheapest flagship with jack-of-all-trade spread of specs where it matters. Chinese yen are weak, so those trying to compare Asian price are less likely to get a true apple-to-apple comparison. The TL;DR is that Nothing Phone (3) doesn’t have obvious value proposition that previous models had, as it’s positioned as a true flagship but is specced in a rather watered-down way, especially when you all wanted Nothing up go all out even with said price. P.S. this is not meant to be defending the phone, but is rather a completely honest take on the phone’s spec and pricing.

Your mileage may vary, and it’s on you.