When you see the "Replace Battery" warning icon, it's because your Mac has detected an issue with the battery and it needs to be replaced. You can continue to use your Mac with no problem, but understand as the battery degrades, you'll get less and less charge meaning you'll be tethered to a wall outlet more and more. The only time you really need to worry is if the battery starts to swell.
This is based on information it's getting back from the battery's on board chip that stores information like cycle count, current maximum charge, the initial maximum charge, etc. as well as measurements and calculations the MacBook is doing.
Currently, the battery cycle is 829 and the manufacture date is 2017-06-19.
This is normal. Batteries have a lifespan of about 1000 cycles and a life of 3 to 5 years. This one is a bit on the early side of the curve, but not unexpected. These numbers are derived from testing and modeling - there's no way to say that a battery is guaranteed 1000 cycles and exactly 4 years of life.
Is it just that the battery has consumed too much and Apple encourages me to change to a new one or is there a serious problem on the battery?
No. Apple doesn't "encourage" you to change your battery after a specified amount of time/cycles. You're getting this because the battery is no longer capable of supplying the amount of charge as spec'd out by Apple.
What could cause it?
- failing/defective battery cell
- buildup of the SEI layer (normal wear)
- exposure to temperature extremes
- physical damage
What is it exactly? It's impossible to know. We don't have the ability to "peer into" the battery pack and look at all the conditions in there (well, we do in the lab, but not in the computer). The best we can do is take some measurements and make an educated guess - that's what the computer is doing when you get the battery health info.
Replacing the Battery
Typically Apple (and ASRs) will replace the entire top case of the MacBook. However, if you have some technical skill (or know someone who does) and some patience, you can replace the battery itself; iFixit.com has excellent instructions