1. You’re stretching by trying to equate an online feature being active for 2 years before stopping to be 2 years of support. The last real dev support ended in January 2018. An initial marketing push is not a result of success, it is an attempt at it.
If they were still promoting and running Party Crash events, then they were still supporting the game. That still takes resources, staff, and coordinators to do.
2. If the goal was to show off the joy cons’ motion controls, as you say, then they failed for the reasons I already stated. When success looks like in that regard are the 20M+ selling motion games on Wii and driving the sales of tens of millions of consoles, a follow up selling a mere 2.1M and not creating any kind of significant sales wave can’t be regarded as successful.
You forget that
A.) ARMS is more "core" oriented than games like Wii Sports or Wii Play.
B.) Wii Sports and Wii Play came with Hardware. Wii Play sold because it came with a Wii Remote, not because it was a great game. Wii Sports came with the Wii itself.
ARMS was always going to do less than those games because of those factors. That said, on its own merits, it was still a very successful game for what it set out to do. By your logic. 1-2 Switch was also a colossal failure because it didn't do the numbers of Wii Play or Wii Sports, never mind the fact that it wasn't a pack in with anything, or that it was $50. By the standards of a standalone release, ARMS did very well.
3. Despite what you may think about Nintendo, their resources are not boundless when we’re talking about the devs that work on their core strategic titles. If it were a matter of spending some of the billions of dollars Nintendo has to push out some extra game, they wouldn’t have used their core devs. They would have used one of their lesser teams, bought a new team, or contracted a third party. Instead, they used the devs that made Wii-series and Mario Kart: games that have sold between 20 and 80 million+ and have been core to driving millions to tens of millions of console sales. These employees are a finite and extraordinarily valuable resource, not devs they use to push out titles with the expectation to only sell a couple million.
You make it sound like Nintendo is a struggling indie studio who needs to focus on the big titles to make it by. They're not. They're a multi-billion dollar company with nearly a thousand developers at their disposal, all supporting a platform with over 40 million users worldwide. They're a big company, they have the resources to make games that don't do Mario and Zelda numbers, yet still be profitable. Again, May I remind you that this is the same company that still continues to put out Pikmin and Rhythm Heaven games in-house despite never breaking past 1 million copies?
Nintendo's developers should be free to make whatever they want to make so long as its profitable. If the team wants to make another ARMS game, then they should have the ability to make another ARMS game. Don't you want developers to make the games THEY want to make?
Nintendo made no strategic gains: no millions of extra consoles sold, no new markets created, no new massive 10M+ franchise established. If none of these things were a goal for Nintendo with this title, they’d not have used these particular resources for it. Especially in the launch period of one of their important consoles.
ARMS filled a niche early in the Switch's life. It was a non-Smash Fighting game with a unique premise that showed what the Joy-Con can do for traditional game genres, and sold well on the then very limited Switch userbase. A sequel will obviously be expected to sell more now due to more competition and a larger userbase. But for a launch window title, 2.1 million copies is very good.