Step 1: Equation of ellipse and tangent
Ellipse:
\[
\frac{x^2}{a^2} + \frac{y^2}{b^2} = 1,
\]
where $a^2 = 2$, $b^2 = 1$.
Equation of tangent at $(x_1,y_1)$:
\[
\frac{x x_1}{a^2} + \frac{y y_1}{b^2} = 1 \Rightarrow \frac{x x_1}{2} + y y_1 = 1.
\]
Step 2: Intercepts on axes
$x$-intercept ($y=0$):
\[
\frac{x x_1}{2} = 1 \implies x = \frac{2}{x_1}.
\]
$y$-intercept ($x=0$):
\[
y y_1 = 1 \implies y = \frac{1}{y_1}.
\]
Step 3: Midpoint of intercepts
\[
M = \left(\frac{1}{2} \times \frac{2}{x_1}, \frac{1}{2} \times \frac{1}{y_1}\right) = \left(\frac{1}{x_1}, \frac{1}{2 y_1}\right).
\]
Step 4: Find locus of $M$
From tangent condition:
\[
\frac{x_1^2}{2} + y_1^2 = 1.
\]
Express in terms of $M=(X,Y)$:
\[
x_1 = \frac{1}{X}, \quad y_1 = \frac{1}{2 Y}.
\]
Substitute:
\[
\frac{1}{2 X^2} + \frac{1}{4 Y^2} = 1.
\]