Buy for Kids Who Aren't Ready for a Phone
The iPod Touch market is still mainly kids who need something more portable than a tablet, but who aren't ready for an iPhone yet. Apple sticks with this pattern for the 2019 iPod touch.
The new AR feature is especially targeting kids as the use cases are often educational apps or games and with Screen Time parents can set limits on the device.
If you want a new device with a warranty and accidental damage coverage, the iPod Touch is also a better option than a used iPhone. Unlike with a old iPhone there is no worry about a kid accidentally calling 911.