The iPhone XS is the same as the iPhone X, with some improvements.
It’s a device meant for people with older devices to jump the wagon into the new buttonless full screen new world.
The XS Max is then meant for people with older “Plus” devices. The XS is clearly not mean as an upgrade from the X, as the Apple lady correctly explained.
iPhone devices are designed to last, and now (for several years already) that the technology has matured enough (for everyone, not just Apple), there is no sense at all on getting a new device every single year (*), just for the sake of having a new device. Every device since the 6S/SE, no longer available as new, as well as the 7 and 8, are amazing devices, still working perfectly (*2) and being supported by iOS.
In other words, this year it’s perfectly clear that people shall keep their devices, if they’re happy with them, with the only decision relevant for the upgrade is if you want to move into the full screen and Face ID, or still have some personal reservations about preferring Touch ID. And even if you want to try it, the XR may be a perfectly good alternative.
Instead of “wasting” money on a minimal upgrade, instead invest that money on something else. The Watch may look superfluous, but once you use it, you won’t regret. The AppleTV may be an option, depending on the content available on your country.
Apple wants you to be satisfied with what you have. They don’t want you frustrated (jealous?) because there’s a slightly better device, nor frustrated because you either don’t have the money for it, or because you couldn’t resist.
Compare this with other brands where they purposely sell a device incapable of upgrades, becoming obsolete in one or two years, and forcing you to buy a new one. Apple is not forcing anyone to buy new devices.
So, in conclusion, the three X* devices are the devices for people that want to move to the new full screen interface, but didn’t (rightfully) want to risk it last year.
(*) if you have access to an Apple or Telco plan that has advantages to “rent” a device for a year and replace it every year, or if you live on a country where the second hand market is safe and alive and it’s easy to sell the previous device and get the new one for a small price, please do do it. The point is that people buying the XS and putting the X back in the box is pure ridiculousness.