It ain't THAT hard to understand:

• handheld gamers who want a lighter and better portable device
• gamers with a $200 budget who want to play Switch games
• parents/relatives buying a gift which plays Switch games

Perhaps you'll understand it when sales go up YoY beginning September 20th

personally? not at all interested, I want a significantly more powerful switch (so that I can play games like Xeno2 with a good resolution), but Nintendo has never given me what I wish for, so meh, I'm used to it, I guess I'm just not part of their target audience
from a business perspective? good idea, it's going to move some serious units.

And the original Switch wasn't going to be bought by the majority of those segments?
The sales pace of Switch and strong appeal seem to indicate it would.

The only part of what you mention that could, in my eyes, be seen as relevant - as in, to cater to - would be the dads and relatives. But even then you could the price of the original Switch by 50$ or add some games to increase the value.

That's why i ask: why bring this Switchless console to the market now when the original is still selling well and has enough appeal?

I still don't get why they needed this console.

If they happen to release a $199 Switch micro console with a pair of Joy-Cons next year would it still be a handheld disguised as a console or would it simply be that they are releasing different versions of Switch that cater to more specific demographics?

Some of the handheld gamers bought or were going to buy the original Switch, others wouldn't for different reasons (too clunky on the go, waste of money for features they don't want/need). We don't know which of these two groups are the majority.

Most price conscious people who set themselves a budget for buying a Switch (for themselves or as a gift) would just wait longer until their chosen price is reached. If they wait longer to buy the hardware, they will probably also buy less games for that system in the long run. Since most of the money is made by selling software, it is in Nintendo's interest to boost the hardware base as fast as possible. 

The sales pace of Switch is good, but of course it can be much better.

By lowering the price of the original Switch by $50 they wouldn't reach the people with a $200 budget.

They would also lower their profit margin for the Switch by $50.

The production costs of the Switch Lite are probably much lower than the production costs of the original Switch: no Joy-Cons (including separate batteries + HD rumble), no dock, smaller battery, smaller display...

By selling an entry model with less features & less production costs they can keep their profit margins high.

To reach different target groups with different models. Almost every other company does that (Sony, Microsoft, Apple, Samsung...); Nintendo did that too with different DS and 3DS models.

It's really not that hard to understand.

Great idea, it makes sense but I find it lacking so I'm not going to buy it. Also those colors aren't pleasing.

From what we can see, people aren't waiting to buy Switch in a meaningful way.
If PS4 could sell more than 90 million consoles with a price higher than Switch's, why can't Switch do at least close to that? 
it already sold 35 million in little more than 2 years.

People with a budget will always exist, but that hasn't stopped an appealing product to sell very well - if not very, very well.

Yes, a Lite model probably makes them save more money than a 50$ price cut. But that's just an option.
Including games probably works better, specially if those games are the system selling ones. For people with a budget, who are going to buy games anyway, the console just got way cheaper in comparison. Right?

The smartphone comparison might not be a good one, as price diferences are substantial on that market. More, nowdays, these Lite models are presented at the same time as the better models, so, there's no selling something better and then selling something worse based on the premium models.

Nintendo did present newer models over the years, but even then, they always presented something better, not worse. 2DS was the only exception and that was probably due to the backlash of the use of 3D and the fact that people didn't really care that much about it after a while.
None of those reasons are present here for Nintendo to release a Lite model now.

If anything, they should have released a Pro model in anticipation of PS5 and XB2.
This model could have worked after they had tapped all they could have sold with the original Switch. And honestly, i don't think they did that with 2 years on the market.

That's why i don't understand this move now.
Going after price concious people is something you do later in the life cycle of a product, not when the product is maturing.

My favorite mode, after a year of never even trying it, has become Table Top mode with a joycon in each hand. That alone makes the Lite a no go for me.

Already have one. Play it docked 90% of the time. But it's great for people looking for a handheld only option that's cheaper.

Switch Lite is one of the rare versions that doesn't detract from the prior release imo.

Lack of docked play means I won't be getting this even if it was half the announced price. Handheld gaming means almost nothing to me personally, so that pretty much instantly rules the Switch Lite out. In my eyes this is a straightforward downgrade from the base Switch.