I think it hits 5 million. Mario Tennis on Switch hit 3 million, and I think Soccer is just more popular.
As for the bonus question, if Nintendo thinks that model is better at increasing engagement and getting more sales, then that's their right. If you don't think a game has enough content in it at launch, then you're free not to buy it.
As a potential buyer, I'm on the fence about it. For instance, Switch Sports really doesn't have enough content for me yet. We know Golf is on the way. I would assume more sports would be added in the future, but in the past, I bought games believing more content would be added, and that hasn't been the case, or the content hasn't been worthwhile enough. For instance Mario Golf and Marip Party Superstars. So, this time, I'm going to sit on the fence, whereas if there were 2-3 more good sports I would buy it.
As for whether the content is in the game's code or not, I don't find that detail especially relevant.