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Plenty of game carts may leave empty space available to write, so patches wouldn't need space on console/SD card.
For those that need extra space, you have flexibility to store it on internal memory or whatever SD card you prefer.

It does sound like physical "carts" will have advantages here, but I don't really have a problem with that...
And over the lifetime of the console, prices on SDXC cards should drop, and 512GB+ sizes should get reasonable.
Now just hoping that it is at least close to Xbone/OG.PS4 power at least in toaster mode.