The current Switch can straight up run full blown high end PS4/XB1 games.
It's just a little cramped to do it and there are cartridge storage issues to account for also, but it can do it.
Switch 2 will be able to do the same for PS5 more easily with DLSS factored in and larger cartridge sizes also I think. 64GB cartridges will likely become reasonably cheap and 128GB may even be an option fairly quickly.
Not to mention SD Card options ... there are even some 1TB SD Card nowadays can be found for as low as $45 US on Amazon, let alone a couple of years down the road.
Sounds very much like the typical Chinese offering where devices get tricked into showing eight times the space of what is available in reality. So your example would actually be an 128 GB card advertised as 1 TB and $45 is a rather high price for that; but that's the point of the false advertising, to sell the same amount of storage for a higher price while suggesting that consumers are getting a good deal. What makes matters worse is that those cheap SD cards have also common problems with reliability, so they stop working fast. They are an all around bad option.