@veru I've heard that it might actually be more expensive to make smaller carts since the modules don't actually exist and Nintendo would have to get them completely custom made. Don't know how accurate that is though.
If key carts didn't exist, the games would just be digital anyway. Developers aren't going to pay more money when they could just keep a game digital only. A key cart is a good in between solution for people who might still want to be able to lend/trade/sell the games.
I think the most elegant way to do things would be for developers to use switch 1 carts that will let you download a free switch 2 upgrade/edition. You're still downloading the game though and will lose access to it if the servers get taken down, the only benefit is that you'll still have the switch 1 version. Some games might just straight up not work running off a switch 1 cart either, of course.
As long as the actual Nintendo games are still physical I'll be fine, that's the only reason I have the consoles to begin with.