There's a very good reason for this: The whole OS is under 400MB. Every Nintendo Switch game cartridge comes with a full copy of the necessary OS on it.

Every game card is playable, no matter how out of date the Switch is, without any internet connection.

I'll take that kind of functionality before "surprise and delight." We might get "surprise and delight" this generation though, if in part because the change to a modified Samsung NAND over Macronix might be cheaper at larger capacities if rumors are correct.