Excellent comment and analysis, my thoughts exactly. The days when you could depend on rolled steel armor alone for "protection" is sadly gone. You can depend on ERA armor and smoke grenades for protection to some degree, but once you are hit with Sabot rounds, you are toast, even if you have ARJUN or LEOPARD tanks with "heavy" armor.
In fact these VT-5 light tanks do have special rounds that are exclusively used for hunter-killer roles designed to disable tanks. If a conflict breaks out in Galwan using these tanks (hope not), we will see for ourselves how these tanks fare, I don't know if Arjuns can be deployed that high up.
Ultimately, like you said, success in tank battles will depend on sophistication of rounds, whether fired from ATGMs or Tanks themselves, and/or the skill/training/guts of the army personnel operating them. I hear the VT-5s (with NATO-compatible 105mm
rifled barrel) can even launch guided shells with range in excess of 5 KM.
Now that will be a game changer.
Ultimately heaviness of armor in a light tank is a compromise between agility and protection, the latter nowadays less critical because no armor however heavy can really stop a modern/sophisticated sabot (APFSDS) round other than reactive armor, there are sabot rounds that even reactive armor cannot even stop (successive burst rounds).
@PoondolotoPandalum bhai stated this very clearly already. VT-5s are lightweight companion tanks, not Main Battle Tanks,
so agility is more important from an ambush perspective. The MBT role goes to MBT-2000 in Bangladesh Army arsenal and that one has I believe more sophisticated traditional and reactive armor.