The exterior design of all the Apple M1 iMacs is the same, but there are significant changes made under the hood. You might not have noticed this, despite the same exterior of the entry-level M1 iMac and the high-end M1 iMac, there are a lot of differences between them which indicates that you should spend more amount to get extra performance; the major difference between the two is that the entry-level $1,299 24-inch iMac has only a single fan for cooling the M1 chip.
A Youtuber named Luke Miani pointed out the difference through a Tweet. If we open the thread, we can see that there are even more changes. Apparently, the entry-level option only has a heatsink to transfer the heat M1 produces, while the high-end with 8-core CPU and 8-core GPU not only has two fans for additional cooling but a heat pipe which ensures heat is effectively transferred.
Apple has implemented this clever technique to cut down on their manufacturing costs, and Apple has implemented similar techniques in the past too. Although both the M1 MacBook Air and M1 MacBook Pro share the same M1 chip, the Pro variant comes with a dedicated fan while the other variant offers a fanless cooling system. You should note that the base M1 iMac and the Air variant share the same 8-core CPU and 7-core GPU. Apple’s idea to persuade customers to spend more money on higher-end models is backed by the performance increase they offer.
This can be the reason why the high-end M1 variants have an 8-core GPU instead of the 7-core GPU housed in the $1,299 variant. While running some benchmarks, you might not notice the performance difference. However, if you run the same benchmarks in a loop or a heavy workload for several minutes, you will quickly notice why an improved cooling system is important.