UE4 very laggy, why?

Unfortunately that laptop is below the recommended specs for UE4. The Macbook Air’s don’t have a very powerful CPU or GPU, and 4gb of ram is easy to exceed with regular use.

's the recommended specs:

While the processor clock speed is not listed in the recommended specs, generally you would want 2.4ghz or greater for decent performance. The GPU you have is built into the CPU, for best results you would need a dedicated graphics processor (ATI or Nvidia).

You can adjust quality settings by clicking the Settings button on the toolbar, then in the Scalability Settings lower the quality level down to improve performance.