how do I reset my MacBook Air to factory settings

Depending on your installed version macOS, the 'reset' may vary..

And so interpretations of 'factory reset' could mean wipe contents

fully as though you were going to trade, sell, give away, the Mac.

• What to do before you sell, give away, or trade in your Mac | Apple Support

https://support.apple.com/en-us/HT201065

The best way to restore your Mac to factory settings is

see #7 above: erase your hard drive and reinstall macOS.

Good luck & happy trails!🌞|⛵️

Factory defaults will mean a reformat and reinstall. If you're determined on doing this then, if it was me, back-up anything important (photos, music, videos, documents, email etc) first. Once you're happy with the back-up then follow the instructions given here:

https://support.apple.com/en-gb/HT204904