That's not an indicative of limited resources at all. Nintendo ceased development of new Wii U titles in 2015, and most of their teams moved on to the Switch, prepping titles that would release for the first year. They prioritized the 2017 because the Switch needed to be as successful as possible, as fast as possible. They didn't start on future projects until after the console became a known success. Considering games generally take 2-3 years to make, next year should have more EPD projects ready including ARMS 2, Animal Crossing, WarioWare, perhaps even few new IP. HD development is only a problem with AAA games, as they need high budgets to keep up with audience expectations, thus need more staff to compensate. Outside of BotW, Nintendo games are typically made on very modest budgets, and have small teams and short development cycles. Splatoon was made in just a year and a half for example. BotW caliber games from Nintendo are more the exception to the rule, even Shinya Takahashi admits Zelda games are typically Nintendo's biggest productions. 

ARMS may not have been a breakout Splatoon-like megahit, but there are still people talking about it, and as a new IP, it was a solid start for Nintendo to persue more of it. I mean, we have a Dark Horse comic book coming next year, just in time for that potential sequel, and I'd be interested in seeing your reactions if it does turn out to be a real in-house developed sequel. 

People are not still talking about ARMS, look how dead its boards are: 

https://gamefaqs.gamespot.com/boards/204207-arms

http://www.neoseeker.com/forums/97537/

And my reaction will be that it will simply be yet another bad decision by Nintendo, like the Wii U and the Virtual Boy.

And again, 2018 is not the result of lacking resources, it's the result of not really planning much for 2018 internally. Nintendo's shown that they can release a consistent stream of in-house titles in a single year on Switch. 2018 is comparatively bare because Nintendo didn't have much in development that could make a 2018 release, as most of the later Switch games began development after the console's launch. Besides, as I mentioned, the vast majority of Nintendo's in-house titles are made with small teams, so how much staff are they really taking up? 30-50 people out of what, 700+ developers? 

And are you really going to use two niche fourms to try and prove ARMS is dead? The ARMS sub-reddit, YouTube, and more general Nintendo or gaming discussions are far more accurate of the game's player base, and it's still got a loyal following. 

No publisher plans to leave gaps in their lineup if they can avoid it. If they could keep putting out big games through 2018, they would have, naturally.

Gamespot ain't niche, and ARMS discussion is effectively dead on Nintendo forums too:

http://www.nintendolife.com/forums/nintendo-switch

 http://www.ign.com/boards/forums/nintendo-lobby.80041/

Heck, even right here on VGChartz, where we have a thriving Nintendo community, yours is the first ARMS topic on the Nintendo forum since May:

http://gamrconnect.vgchartz.com/board.php?id=4

I'm not saying Nintendo planed to leave 2018 the way it is. What I'm saying is that they weren't really working on anything that could make a 2018 release outside Labo. Their main priority was making 2017 the best it could possibly be. Besides, Nintendo has external partners to fall back on, and Smash Bros. and Pokemon will make up for EPD's comparatively low output, until their next batch of titles are ready. 

Anyway regarding ARMS discussion, okay, so forum discussions are limited. But the game still has a loyal and active player-base, which means it still has a following. It's even getting a comic book next year. Like I said, it wasn't a breakout megahit, but it's still a solid success that warrants a sequel. 

External partners and outsourcing do help a lot, yeah, but you still have to be careful how you allocate your flagship teams when you're a first party with the weight of selling your system almost entirely on your shoulders; its not like MS or Sony where they can lean on third parties to do a lot of the heavy lifting.

Just how big is this "loyal player base" though? It's all well and good to have a small following of passionate enthusiasts, but to attain lasting success takes more than that.

Look, I know you really want an ARMS 2; there are a lot of games I'd love a sequel to as well, but unfortunately things don't always work out the way we want. I'd give my right arm for The Last Story 2 for Switch, but I doubt it will ever happen. Who knows, maybe they will make an ARMS 2, stranger things have happened. I'm just trying to look at things from a business point of view.

Nintendo already has a good chunk of system sellers on the Switch already. Super Mario Odyssey, Breath of the Wild, and Splatoon 2 continue to sell consoles regularly, and with Pokemon and Smash on the way, there'll still be plenty of them coming. While ARMS is not a system seller like those two, it still sold enough for it to be considered a success, and many of its players still play it regularly. Besides, it outsold Xenoblade Chronicles 2, as well as many of Capcom's recent fighting games within the same time frame. 

It's not just that I want an ARMS 2, it's that I don't see why there won't be an ARMS 2. It's a successful new IP with a comparatively small, but loyal fan-base that can be even bigger with a new installment. And like I said, Nintendo never goes into new ideas thinking they're going to be the next Mario. A game should succeed on its own standards. Sure, it may not make sense for someone like EA or Capcom to keep going with a game that only managed to sell 2 or 3 million. But for Nintendo, who's games don't need to be 4m+ sellers to be a hit, it makes sense. 

Nintendo has increasingly turned to outsourcing in recent years because EPD can't make HD games fast enough to provide a steady stream of content. Starfox Zero was outsourced to Platinum, Metroid to MercuryStream and reportedly Namco, etc.

It comes back to it simply making no business sense to commit a flagship team to make a game that will be lucky to reach 3 million lifetime when that same team could make the next breakout new hit or 10 million plus seller. ARMS was not a breakout success, it didn't push hardware and it fizzled out and was forgotten inside a year.

Sorry to crash into your discussion, but I just wanted to add that it wasn't Nintendo who approached MercurySteam, it was the other way around:

https://nintendoeverything.com/sakamoto-on-metroid-samus-returns-development-final-boss-switch-more

Also in your later post you mention Kirby being deleoped by HAL and Mario Tennis by Camelot. This is not outsourcing, though. All Kirby games are made by HAL and only Camelot makes Mario Tennis games, so it's rather natural that these games come from these studios.

Who approached who ultimately doesn't matter, nor does HAL and Camelot having worked with Nintendo properties many times before, the point remains the same, that Nintendo relies on external developers to keep their output of games up.