I can make guesses like anyone else about what they’re is going to do or not, but I’m not involved with Neon so it wouldn’t really matter much 
. It’s too bad that the “KDE Developer” badge can’t be hidden for topics that one has no insider knowledge of, especially when I’d like to just ramble and discuss like a normal person. Oh well.
With that out of the way, I think my idea of a distribution is a little more forgiving than yours. As in, Ubuntu LTS and Debian stable count as distros. Not necessarily ones that I personally would use, but not terrible ones either. Ubuntu LTS works for a good number of people, that’s why Canonical puts effort into it and why it gets used as the base for lots of spin-off distros despite being severely outdated after a while. So Neon sort of counts as a distro automatically as long as it doesn’t break what Ubuntu LTS provides.
The thing about distributions is that each of them targets a different audience - I like up-to-date rolling releases with mostly unaltered upstream packages, whereas my girlfriend likes stable upgrades and not having to look after her system too often.
Neon has been squarely focused on providing up-to-date KDE software fast with minimal effort spent on non-KDE packages. From what I can tell, audiences for that kind of combination include Plasma testers, distro reviewers and other media people, packagers from other distros (i.e. getting experience and finding issues so other distros can benefit from it), and people who like getting the newest Plasma but don’t mind old packages elsewhere in apt. That’s a pretty narrow audience in the grand scheme of things.
I wouldn’t recommend Neon to my family because it prioritizes fast releases over comprehensive testing. I wouldn’t recommend it to gamers or people with the newest hardware because Ubuntu LTS is the base. I wouldn’t use it myself. But that’s okay. The point of distributions is that there are different ones out there for different people. Some have a broader appeal, like Fedora or Ubuntu (non-LTS), and get very popular in the process. Some have a very narrow appeal, like distros meant for USB recovery drives or security auditing. All of them are distros, but not all of them aim to be everything to everyone.
I would like to eventually see KDE produce a distro that I can recommend to friends & family who are not KDE fans. Maybe one day they’ll come up with this semi-rolling immutable well-tested KDE distro that I think would rock hard. But without a serious change in focus, Neon won’t be that. It doesn’t look like Neon is shifting focus, it looks like Neon is trying to stay the same but communicate better what it’s doing right now. The recent update was a start, whereas the status of apt for user software needs to be made much clearer.
So to stop rambling, my guess for the answer to your question would be “We are relying on what Ubuntu LTS is doing” because that’s what it’s been doing the entire time and that’s also what it says on the current FAQ:
No, we plan only to base on the latest LTS version of Ubuntu, this comes with Linux and graphics stack updates to keep drivers relevant. We will backport other software as needed.
Personally, as an end user I would skip Neon altogether in favor of Tuxedo OS, which has more mainstream aims and backports also non-KDE packages. But again, that’s just my personal opinion without the KDE Developer hat on. Hopefully I was able to express myself without sounding offensive this time around 