While I agree with your statement about what it's always been about, your example is incorrect. There were no 4-bit consoles or a 4-bit generation. The Atari 2600, Colecovision, Odyssey2, etc. were all 8-bit consoles. The 2600, for example, is driven by the 8-bit 6507 with an 8-bit system bus. And just to throw in another interesting example, the Intellivision is a 16-bit system, driven by the 16-bit GI CP 1600 microprocessor. Comparing by bitness was simply a marketing strategy started around the time of the Genesis/Megadrive to promote the inaccurate perception that it had something to do with the graphics power, which is when the rationale that "well if this is 16-bit and the NES is 8-bit then the older stuff must be 4-bit" reared it's head. From the Fairchild Channel F/Atari 2600 on through to the NES/SMS/7800 you simply have different waves of 8-bit systems, all differing by their graphics co-processor capabilities. That's where your "enabling better graphics/more memory" observation is spot on.
