I think the Biden camp is firmly convinced that fear of Trump is enough to get him a second term, somewhat regardless of Biden's own limitations. Polls this far out before campaigns aren't really that instructive, as can be seen by going back and looking at who was winning at similar points.
I don't think you can argue that either the escalation in Gaza nor war in Ukraine are Biden's fault, yet both create such significant negativity in the media that it will flow through onto him, as President. By all typical metrics his administration has done an excellent job on the economy and employment, while also passing some historic bills. I think those competing forces would have him broadly in the lower end of incumbent Presidents at this stage. (who almost always win)
But, he's also very old. And there's a dedicated media infrastructure desperate to point this out, even while his likely opponent twice in a week forgot who was President, in public. There's nothing Biden can really do about his age, other than resign. If Harris weren't historically unpopular, I think that would be the decision his team would make, but unfortunately she would do even worse than he would. And starting a primary now could bring very real electability problems to any eventual candidate, even if there was an obvious front-runner, which there isn't.
I think stepping back, the DNC is basically playing an 8 year game here. Biden should be able to take Trump just purely on how f*cking nuts Trump is going, and how much of the independent vote he's lost. Trump's popularity has to wane once his statements (like locking up his rivals in camps) are actually the main story again. He's benefitting from the Hargreaves disorder at the moment - getting better because he's not as visible. Couple that with the anger on Roe and for sure Biden could win again. Then you have a clean slate for Whitmer or Newsom or whoever next time.
Will it work? I'm not sure, but I feel like that's the situation. And that some of the smartest people on Earth undertand the implications of a second Trump term, and hopefully would act within their power to choose the best path against that.
Trouble for Biden is that about half of those who favor him over Trump also think he’s too old, which is a harbinger of low Election Day turnout imo. That could of course be mitigated by Trump’s presence in the race, but all things said, Biden should not hang his hat on the idea that he will win just because he’s running against a deeply flawed opponent.