I'm thinking that Squadrons is a test-bed for something bigger, kind of like Battlefront 2015 was for Battlefront II 2017, though I myself would prefer a better single-player campaign experience. I think that the campaign was more of a short story rather than something full-fledged as in prior games. I do think that actual customization of craft with a much more in-depth loadout menu is an excellent and welcome evolution of where we last were with X-wing Alliance, so even though there's only eight ships, there's lots of combinations that can be made. In the older games, you could only change warhead type, countermeasures and beam weapon (if installed, usually only on Imperial ships).
I would love a sequel or any potential DLC to help grow the universe. One word of advice though for the story: Don't rehash familiar battles or have self-contained stories that don't seemingly affect the overall lore. My biggest complaint is that the story seemed inconsequential to the universe at large. Space combat games tend to have an over-arching plot threads that alter the scheme of galactic history, for X-wing it was telling the story leading up to the Battle of Yavin, and the expansions covered the aftermath and lead to setting up the Battle of Hoth. TIE Fighter had the most unique story, dealing with the Empire fighting Rebels, ending civil wars, establishing bases, and thwarting conspirators, renegades, and traitors while fleshing out beloved characters such as Grand Admiral Thrawn. X-wing Alliance of course tied into the era between the Battles of Hoth and Endor while tying heavily into Shadows of the Empire, referencing Admiral Zaarin as a nice nod to TIE Fighter, etc. The missions also felt more complex in terms of actual military operations, though I understand that creating that kind of fidelity might have required a budget increase. Hopefully, the success of Squadrons will lead to that increase.
In terms of what the story should be? Imperial perspective but set at some point following the aftermath of the Clone Wars. This expands the game to use prequel-era vessels that are generally absent by the time of the OT and also allows for lots of original designs to come about while reaching the familiar Imperial ships we all know and love. The era itself lends itself to all kinds of world-building that have really only been touched upon by Jedi Fallen Order, and Solo: A Star Wars Story. We can have similar stories to TIE Fighter where the Empire is establishing order in the Outer Rim, dealing with left-over Separatist insurgents, dealing with renegade worlds (Mon Calamari and Sullust come to mind), and fight pirate bands, criminal cartels (Black Sun and Crimson Dawn), dealing with a new "Clone War" where the Kaminoans realize they've been used and attempt to breed their own clone army (actually, this could be the basis for the modernization of the Imperial Navy and replacement of Clone Troopers with Storm Troopers). Familiar faces should appear, but not necessarily take center stage. Serving under Thrawn was great during TIE Fighter, as well as flying with Darth Vader to save the Emperor from Zaarin's treachery.