720P is 921,600 pixels.
This. It's a low-cost entry that will be extremely palatable to mums and dads buying for their kids Birthday/Christmas... I.E. A large portion of the 3DS market.
When you say higher visual settings in docked mode... what titles do that? 90% of games that I've played or games which have been reviewed in depth by digital foundry the difference between docked and handheld is resolution with almost always the same LoD, textures and shadows between the two versions, the key difference which always comes into play (except for Dragon Quest Builders 1) is that the resolution changes, I think DQB is one of the few titles which is 720p in both modes but in docked it aims for 60 whereas handheld it aims for 30. It's far easier for devs to just rely on the upped resolution of the dock to allow the game to get rid of the rough edges which would look awful on a big screen at those really low res's that handheld can dip to at times.
Right on the pixel thing, it's been a while since I wrote out those exact figures (think it would be back when there was people suggesting that the X1 running games at 720p was neck and neck with ps4 running the same game in 1080p) still though, 2.25x the pixel count is no small feat for a gpu to be asked of, like I said ... it wouldn't be ideal to hold the system while it's doing that.
Fancy hearing me on an amateur podcast with friends gushing over one of my favourite games? https://youtu.be/1I7JfMMxhf8