Like it or not apparently Switch piracy is a thing so this doesn't really change much for their current situation. But it does give people who want to do things the right way an avenue to do so.

I kind of think of it like high end CAD software and such that ships a physical dongle in order to use the software--Nintendo can sell hardware to help ensure it's legitimate use of their emulation software.

What you call 'control freak' is just the culture of a company focussed on creating a curated experience which is a combination of software, hardware and user experience. Anything not fitting in that vision diminishes that experience and they will do anything to prevent that. Of course, they also like to get paid for their work ;)

Also Nintendo's whole philosophy is all about doing more with less. They make money on every device by not putting out overly engineered / performant systems. So they have always been lagging in terms of cutting edge hardware, but they make up for it by focusing on joyful content.