Eh, you get far more prepared spells than you get cantrips. A 1st level wizard has 4 prepared spells and 3 cantrips known. A 10th level wizard has 15 prepared spells and 5 cantrips known. Cantrips are a tight commodity.
Now, expending a 1st level spell slot for light plus a moderate ongoing damage attack wouldn't be unbalanced. But take a look at the level jump between "Light" and "Daylight". Clearly, the designers thought that a handless light is worth quite a bit. Daylight doesn't even harm undead; it's only additional rider is dispelling darkness spells of 3rd level or lower.
So, a lower level daylight that also gives you an attack doesn't seem in line with what the designers thought were balanced options. I'm not one to say the designers can't make mistakes, I'm just looking at what they have for guidance here.
So first its not just the 1st level spell, its also the cantrip. That is deliberate.
Secondly, There is a bit more to consider here:
coverage bright/dim: light 20/40, Daylight 60/120, Produce Flame has 10/20
Can be cast on object: light/Daylight (My change only allows you to cast it on specific items or where you stand at the cost of a level 1 prepared spell and spell slot)
Can be covered to hide: light/Daylight
Can dissipate the level 2 spell darkness: Daylight
("it's only additional rider is dispelling darkness spells of 3rd level or lower." That's a huge rider since Darkness is a level 2 spell and will normally be cast at base, though warlocks will cast it at a higher level by design)
Can be dispelled by darkness: light/Produce Flame (That's right, you can't use the attack at all if in darkness because the spell is strait up ended before it is cast every time.)
--Per Sage advice cantrips can not be cast at a higher level because they don't use spell slots (
http://www.sageadvice.eu/2015/09/20/can-cantrip-be-cast-at-higher-spell-slot/)
Can be cast on enemies: light (glowing armor should make him easier to find in the dark)
The damage is not changing from the original spell, nor the light so your agreement that "lower level daylight that also gives you an attack doesn't seem in line with what the designers thought were balanced options." since Produce Flame already does both. I am raising the cost to separate the abilities not adding anything new.
In Reference to the "harm undead", Sage Advice has clarified Daylight does not count as sunlight and the difference is intended. So you are correct but I imagine it still causes fights, lol.
