Yeah I could see that being annoying.

On my MBP M1, the Esc key is physical one sitting in the same place as normal; top left. On the top right is the power / Touch ID button. And filling the space between them is the Touch Bar.

And I think the reason I like the Touch Bar is because being able to slide the screen brightness and the speaker volume up and down on it is both pretty quick and precise. Much more comfortable than only having volume up / down and screen brightness up / down buttons. And I can’t really think of anything that I am missing physical Fn buttons for in anything of what I am doing on the machine. Even booting into recovery mode does not involve use of any Fn keys. Just press and hold the power button when powering the machine on and keep holding it pressed until it goes to startup options.