Would a 2 year contract leave him in an RFA state the way the 1 year does? Or would he have been pushed into UFA waters?
2 years takes him to UFA status.
2 years makes more sense if the Senators are sure about him and cannot agree on a long term deal. The reason being, the Senators cannot pay him any less than 1.65 million if qualified next season, and Duclair could potentially get more than that through arbitration.
So if he would have signed 2 years at say 2M (1.65 Y1/2.35 Y2) that would be better for Ottawa (If they were 100 percent sold on Duclair) because it would cost control him, and if he has another 20+ goal season he'd probably get more than 2.xx in arbitration.
Assuming Duclair was on board for a 2 year deal at a reasonable AAV bump above the 1.65M he got, the only reason not to go 2 years is because the Sens think there's a chance he won't take a step forward, and they don't want to be on the hook for year 2.
A situation similar to this one where 2 RFA years were left was Dzingel. The Senators had Dzingel who was in a similar spot (2 years away from free agency) and they settled buying up both years. There would have been little benefit in buying up just 1 year if the team was sure about the player excelling because of how the qualifying offer/arbitration process works.
The Senators paid Dzingel 1.5 in year 1, and then gambled by giving him a 2nd year at 2.1. They were gambling that Dzingel would be worth more than 2.1 in year 2, and they were right. Dzingel probably would have gotten more than 2.1 if the Senators signed him to a 1 year contract and were forced to go to arbitration.
I think that the Senators handled this perfectly. They got a reasonable 1 year AAV. They didn't lose control of the situation by having to go to arbitration where a high ruling based on Duclair's on paper stats might hurt them. Duclair fits a need on this team (scoring, skill), and there's flexibility to either keep him (at least) 1 more year after this, or to deal him at the deadline as a rental.