I think this move was borne of two simple, logical reasons:
1) The semiconductor shortage has screwed, nay, FUCKED Sony and Microsoft. Why would Nintendo want to jump into a market that they can't provide systems for? This is a stepping stone to a real Switch 2 or Switch Pro in '22 or '23 to my eyes. And by then you'll be able to actually walk into a store and buy one rather than dealing with all the stupid bullshit Sony and Microsoft have played by forcing sales online only catering to scalpers and leaving legit buyers who want one to keep and play games on in the cold.
2) Switch sales have not started to decline as far as I know, so they literally have no incentive to halve their base up by releasing a true next-gen Switch. It's not what we wanted, but there are a lot of people who haven't bought one of these yet who will get this new version I think.