As the saying goes, anything is a poison, it's the dose that matters. Short summary, the new 2015 US PHS standard (0.7 mg/L) or even the old one (0.7-1.2 mg/L) are below the doses at which negative effects were observed in China (2.5-4.1 mg/L), and the evidence from there is not of high quality, even though there's one meta-analysis of it. (As a cautionary tale on inferring from low quality evidence, the first meta-analysis of homeopathy found positive results, latter ones which filtered out low-quality studies were more skeptical.)
But back to fluoride, what did the United States Public Health Service (PHS), actually decide in 2015?
For these community water systems that add fluoride, PHS now recommends an optimal fluoride concentration of 0.7 milligrams/liter (mg/L). In this guidance, the optimal concentration of fluoride in drinking water is the concentration that provides the best balance of protection from dental caries while limiting the risk of dental fluorosis. The earlier PHS recommendation for fluoride concentrations was based on outdoor air temperature of geographic areas and ranged from 0.7–1.2 mg/L.
As for neurotoxicity, this was PHS's review of the new evidence:
IQ and other neurological effects.
The standard letters and approximately 100 unique responses expressed concern about fluoride's impact on the brain, specifically citing lower IQ in children. Several Chinese studies considered in detail by the NRC review reported lower IQ among children exposed to fluoride in drinking water at mean concentrations of 2.5–4.1 mg/L—several times higher than concentrations recommended for community water fluoridation.[81–83] The NRC found that “the significance of these Chinese studies is uncertain” because important procedural details were omitted, but also stated that findings warranted additional research on the effects of fluoride on intelligence.
Based on animal studies, the NRC committee speculated about potential mechanisms for nervous system changes and called for more research “to clarify the effect of fluoride on brain chemistry and function.” These recommendations should be considered in the context of the NRC review, which limited its conclusions regarding adverse effects to water fluoride concentrations of 2–4 mg/L and did “not address the lower exposures commonly experienced by most U.S. citizens.” A recent meta-analysis of studies conducted in rural China, including those considered by the NRC report, identified an association between high fluoride exposure (i.e., drinking water concentrations ranging up to 11.5 mg/L) and lower IQ scores; study authors noted the low quality of included studies and the inability to rule out other explanations. A subsequent review cited this meta-analysis to support its identification of “raised fluoride concentrations” in drinking water as a developmental neurotoxicant.
A review by SCHER also considered the neurotoxicity of fluoride in water and determined that there was not enough evidence from well-controlled studies to conclude if fluoride in drinking water at concentrations used for community fluoridation might impair the IQ of children. The review also noted that “a biological plausibility for the link between fluoridated water and IQ has not been established.” Findings of a recent prospective study of a birth cohort in New Zealand did not support an association between fluoride exposure, including residence in an area with fluoridated water during early childhood, and IQ measured repeatedly during childhood and at age 38 years.
From the actual New Zealand study we find out they used a simiar standard as the US, albeit slighly lower at 0.7-1 mg/L, and no effect on IQ was noticeable at this level of exposure.
And the stated reason for lowering the PHS standard in 2015 to just 0.7mg/L was based on risk of fluorosis
Although not fully generalizable to the current U.S. context, these findings, along with findings from the 1986–1987 survey of U.S. schoolchildren, suggest that the risk of fluorosis can be reduced and caries prevention maintained toward the lower end (i.e., 0.7 mg/L) of the 1962 PHS recommendations for community water fluoridation.
and lack of need for the higher value (1.2 mg/L)
Recent data do not show a convincing relationship between water intake and outdoor air temperature. Thus, recommendations for water fluoride concentrations that differ based on outdoor temperature are unnecessary.