It's better to have them doing some exercise than no exercise.... I have no problems with this.
With PE classes rapidly disappearing, plus there are seasons when kids aren't as likely to go outside, there is some merit in this. And what's to say the kid won't enjoy it so much they might start asking for a real bike, and before you know it, this thing is collecting dust in the basement, while they're outside riding around enjoying the good weather.
Gotta get exercise somehow.