Well I would say Arms was never a go at the Wii audience.  The advertising tone made that enormously clear.  It was, I think, more of a go at the new found home motion has found with core gamers thanks to VR.  Obviously, Arms is not VR but they likely felt that the growing comfort with motion controls would be a boon to the game.  And I would say it has, honestly.  Given it is a new IP released on such a young platform with the limited content with free updates later model, being on track to pass 2 mil lifetime is pretty good.  The big limiting factor is really the fact it's a 3D fighter.  Fighters in general are in a bit of a rut, but there's VERY few 3D fighters even out there, much less successful ones.  All things considered, I would say Arms' performance is actually pretty good.  It's certainly not dead like the article suggests.  I can name several games that died after a decent launch.  Battleborn comes to mind.  Shoot, Dead Rising 4 is more legless than Arms :P

The interesting thing to see will be how the updates affect things.  Splatoon updates helped alot not just because of the added content but because Nintendo did a whole second marketing push later down the line.  We'll see what happens with Arms.

It is too hard for super casual play (Splatoon 2 and Mario Kart 8 Deluxe) and I don't think it is gaining much traction in the competitive scene.
I hope the free updates can push the game past 3 million but at this state it may be hard.

The sales of a game depend on the platform it is released on. The Switch had sold about 4.7 million units by the end of June and would probably be around 5.2 million by the time July ended. Arms sold about 1.2 million units on the Switch in about 5-6 weeks. That gives it about an attach rate of 23.1 percent to 25.6 percent which is fantastic for a new IP and a new exclusive in general. My estimates are probably off for the amount of Switches sold... but I'm still willing to bet that the attach rate for the game is still about at least 20 percent. Also these sales only account for around 1 month for the game's lifespan. Lifetime sales can easily land around 3-4 million. To give a somewhat similar comparison. Horizon Zero Dawn sold 2.6 million units both physical and digital on its first two weeks of release. The PS4 had sold around 57 million units by that point. On its first two weeks, Horizon Zero Dawn was able to muster up around a 4.6 percent attach rate which is decent. I would guess for the next 4 weeks... Horizon would be able to get its attach rate closer to 6 or 7 percent with both physical and digital sales and PS4s being sold alongside the game. Keep in mind that these are based off of MY very rough estimates... but Arms is still a relative knockout in terms of sales success.

You're probably right that they exist as tests for whether a motion control audience still exists, and how large it is.

I'd imagine "optional motion controls" like Zelda, Splatoon, and apparently Skyrim is going to be the standard on Switch. It is with ARMS as well, but when played with a regular controller, it's not that riveting of an experience.

Ultimately I think the whole idea of motion controls is moving in the right way. Motion controls are now available for the cases in which they're actually preferable now, like aming a reticule, or rotating an object you're holding. There was a five-ten year period with PC as well where all games had to support both keyboard-only and keyboard+mouse options. And during the PS1 days analog stick control was mostly optional. Maybe one day will will all agree on what motion controls to keep and which will bow to history.

On the case of ARMS though, I think it will keep selling reasonably, and that a sequel of some form won't be out of the question.

Of course it doesn't have legs. It has ARMs. Thats why it's called Arms instead of Legs.