The Switch using an "old chip" is not true. Relative to the portable chips that were available at the time the Tegra X1 was as cutting edge as the PS4 or XB1 were. Switch is more in line technology wise with the N64 and GameCube. They were aiming for a 2016 launch too, 2017 only happened because they needed a couple extra months for software.
The Wii really could not for example run at any "real" 360/PS3 high end games .... the Switch can run games like Witcher 3, DOOM, Dragon Quest XI, NBA 2K, Wolfenstein, Mortal Kombat, which for a mobile chip is quite impressive.
Another obvious benefit of DLSS as well even if you're not making high end games is you don't need to optimize for docked/undocked anymore if you don't want to. A Nintendo developer making say a Mario Party game could just make one version of the game at 960x540 (low resolution).
The DLSS will then simply just take that and use the AI algorithm to create a 720p-1080p image undocked, and 1080p-1440p+ docked. No real work has to be done by the developer. This will save time and man power when developing all Switch games, not just higher end ones by eliminating the need to optimize two versions of every game.