> And things like the ESP-32 have reduced the Pi's practicality on the other end where you just need something powerful enough to read and transmit data from a sensor.

Especially with ESPHome making it so easy to integrate with common sensors without writing code.

That said, the Pi Zero W is pretty cheap and small (similar in size to many ESP32 development boards) so it provides a nice upgrade path if you want to do more processing on device, exceed a few megabytes of ram, etc