You read that right. Not only is there no National Dex in S/S, you will not be able to transfer Pokemon not in the Galar Pokedex forward to S/S, they will not be usable.
"During Nintendo’s Treehouse Live presentation at E3, Nintendo shared an important detail about transferring Pokémon to Pokémon Sword and Shield. Not all Pokémon — and there are more than 800 species at this point — in your collection can be transferred into this year’s Switch sequel.
The recently announced Pokémon Home cloud app, as well as the Pokémon Bank service, let players keep a collection of Pokémon that they could transfer between games and titles. This made the experience of catching ’em all a little less ephemeral, as you had a way to put your library of Pokémon buddies on your mobile device.
However, the new Pokémon Sword and Shield games won’t be able to fully benefit from your collection. You’ll be able to share transfer Sword and Shield Pokémon back and forth withPokémon Home next year, but importing Pokémon will work differently; only Pokémon in the Galar region Pokédex will be able to be imported from Pokémon Home into Sword and Shield.
Producer Junichi Masuda said at E3 that the developers spent “a lot of time thinking about what the best way to move forward was” as the Pokédex grows and grows.
He noted that since there are now “well over 800 Pokémon species in the game”, and the Switch’s hardware quality made it easier for them all to be unique and expressive, the designers had to balance importing as many Pokémon as possible and updating them to these high standards while still keeping development deadlines. The team discussed many options, but finally decided to only allow Galar region Pokémon to be imported.
Gameplay balance was another concern; with so many Pokémon and potential combos, opening the roster up to the full 800-plus list of Pokémon could prove problematic for competitive play.
Masuda said that the team spent a lot of time making sure that there would be a good mix of Pokémon in the Galar region. Not only are we seeing some familiar faces in Sword and Shield, but there are also lots of new friends, like the perfect sheep Pokémon Wooloo.
Masuda didn’t say how many Pokémon will appear in the Galar region Pokédex, but it sounds like everything from the Pokémon Let’s Go games (the original 151 and Alolan region variations) will appear in Pokémon Sword and Shield."
From Polygon and Serebii
This is easily one of the worst decisions Game Freak has ever made. They made the models on the 3DS HD so that they were future proof and they are using them for SS, yet they're too lazy to even add the ability to transfer them into the game and make up a bunch of bullshit about 'balancing'. If your favourite doesn't make the dex, you're shit out of luck, you can't even bring it over to use in the post-game or for breeding. As far as these games are concerned, they may as well not exist.
I really don't fucking understand why GF has to keep shooting themselves in the foot, development needs to be taken off them, they have no fucking idea what they're doing.
Pokemon - Gotta' Catch some of 'em, I guess.