Both teams have weird data points. Michigan is #14 in SP+, Notre Dame is #19. Then you tack on 3 points for home field and that's how you get to -4 as an opener. Baked in to all of that is the fact that Michigan's offense being ranked #52 is clearly based on their early season results and not particularly accurate, but similarly is their defense accurately evaluated at #4?
Vegas doesn't use SP+ or any other system, per se, in evaluating games for setting initial lines... but they do consider all available information. In this case I don't think they expected the public to be such Michigan haters, which is why the line has already moved 3 points. When you consider pre-season perception to now, what you really have to look at is that the line has almost moved a full TD from August... mainly because Michigan is significantly worse than expected on offense, and ND is just about as good as their pre-season rankings. Do I believe their offense is still as bad as we saw against Army, Iowa, and Wisconsin? No, I don't. I think the last two weeks they have shown improvement in their running game, and then in the second half against Penn State finally showcased an efficient passing game. And that's the main reason I expect this to be a tough one. Through week 5, I would have been extremely optimistic about ND's ability to shut down their offense.