Yeah, that small storage space is awful. With how big games are nowadays, it wasn't a friendly move for Nintendo to make.
I feel it was an insular move by Nintendo. Just compare the sizes of third party games vs Nintendo's releases. It didn't hurt them in the slightest. Mario Odyssey is like 8GB or something, Doom is 21 GB, cut down on asset quality and without SnapMap. It's like 80+ GB on the other consoles.
Currently (Re-)Playing: Starcraft 2: Legacy of the Void Multiplayer, The Legend of Zelda: A Link to the Past
Currently Watching: The Shield, Stein's;Gate, Narcos