I've noticed that when filming in harsh sunlight & at certain angles the video feed & recording pick up annoying horizontal lines (as shown in the video attached, on the left side). Is this camera defective or should I use ND Filters on the lense?

That is shade from the props.

You can't really help it, other than move the drone / gimbal around.

I thought it was props based on an Air 2S complaint I saw, but this is just an Air 2 with a smaller sensor and FOV. I thought because of the smaller FOV angle it wouldn’t catch the props/ shade from props.

Hello there vikkydiesel. Thank you for reaching out and for these information that you have given. Kindly please refer to the post #2 by Montfrooij. In addition Kindly please fly the said DJI drone to a different lighting condition and adjust the gimbal of your DJI Air 2S slightly to see if the issue will persist. Thank you.

vikkydiesel Posted at 9-21 12:53
I thought it was props based on an Air 2S complaint I saw, but this is just an Air 2 with a smaller sensor and FOV. I thought because of the smaller FOV angle it wouldn’t catch the props/ shade from props.

Any lens angle will if you fly in a position where the sun shines through the props onto the lens.
You can avoid by being careful about your flying with regard for the sun angle.

Most probably caused by prop shade.  Only way to avoid this is being acutely aware of the angle of the sun and your flight path.