The PS5 and XSX will show titles in a few years that won't run on the Switch even at low settings, there's a few currently
This is exactly where (I think) the op's point comes in though...a Switch 2 or whatever can come out in the next year or two that will still be $300 that WILL be able to run those games. They likely won't have RT or 4K textures or 120fps, etc, etc...but it will run them, haha. And that's where diminishing returns comes in as well, because we aren't going to be seeing demonstrably more hardware intense games as we are already seeing with RT, 4K textures and 120fps options taken off the table. Do you honestly think GTA VI (a random probably demanding game) is going to be massively different in terms of raw hardware requirements than say, GTA V once stripped of extraneous bells and whistles? Probably not, right? Now remember that GTA V was originally on 360 and PS3, 16 year old hardware...and yeah, diminishing returns seems apt when the only real returns are of graphical fidelity in nature, as to opposed to an actual paradigm shift in game design.
This applies to most AAA, biggest best bullshit games out there...God of War, Halo, you fucking name it. GoW 2018 might as well have been a PS2 game. Halo Infinite could look ever slightly less shity and probably run on 360, etc. Sure. Im sure you could come back and say"this use of physics here" or "the animation fidelity blah blah blah", but at the end of the day those are simply embellishments to the core design, and don't fundamentally change much of anything if excised.
Honestly, one of the most technically impressive and wildly popular games I can think of is Warzone, large scale map, 150 people, extremely good graphics, 4K, 120fps, and yet it's running on a (albeit heavily) modified Quake Engine that can also run on a potato and is F2P.
PS5 and XSX, GTX 3080....all of them, don't even need to fucking exist yet, as new hardware isn't required to run games slated for 2023 and beyond still, let alone the (largely)lack of any true innovation in game design beyond "oooooh shiny" going on decades now.
Don't get me wrong, you won't catch me playing multiplat ports on Switch, as I have the above mentioned hardware (I'm aware I'm part of the problem) and I love having the best hardware for games, but none of it is even required for the actual games I am playing.
"Fidelity"
"Immersion"
Whatever.
Just look at the PC space, the largest userbase out there, in that space where the sky is the limit vs. consoles 4 years out of 5, and we still haven't seen games that actually stress the CPU because of crazy physics, or AI or ...ANYTHING. When was the last time people had to ACTUALLY update their rigs because games simply wouldn't run on them? Crysis? For years and years now it's just been to have acceptable resolution and fps, and those gaps between upgrades keep getting wider and wider.
Sure, you can spend $2,000 or more on a gaming rig, spend $500 on a Ps5/XSX, $300 for a Series S, $200 on a Switch Lite and play a whole lot of the same games with varying degrees of performance quality, but fundamentally, they are the same games. It's more a matter of preference or financial ability than anything. I don't see that changing for another 20 years either.
Sorry, that was a major rant, haha. My bad.
You are certainly not wrong, I just went on a sleep deprived tangent.