The games have ToS though right?

The Switch is a closed proprietary platform, so Nintendo can give some guarantees, and if the user does something at the Switch level, the responsibility of legal action will be on Nintendo, saving up headaches to the publisher.

Beaches of a Terms of Service agreement have no inherent legal penalties.

Some actions which breach ToS may be illegal, but that has nothing to do with them being outlined in a ToS.

Bad excuse, they could rely on Steam ToS for example.

Creating a steam account is cheap. Needing to buy a new switch is not.