Tbh Switch being PS4 level will be more than fine for me.

We are reaching a point in gaming where spec upgrades are leading to less and less major improvement to the graphics, and I think it is the most noticable this generation between PS4 to PS5. I honestly feel like I haven't seen any major upgrade in graphics with the PS5 compared to PS4, their the type of differences where you need to zoom in on textures to notice them. PS4 games still hold up well til this day. The advancements from the 5th to 6th gen felt huge, same goes for the advancement from 6th to 7th gen, even 7th to 8th gen felt like a big advancement, this gen didn't nearly feel as significant when it came to graphics advancing.

Even if Nintendo continues the Switch hybrid concept for the the next few generations, with less major advancements in graphics with each generation the hybrid Switch consoles will feel like they eventually catch up close enough to the graphics seen on home consoles even if the specs aren't neccessarily the same.
This is what Satoru Iwata envisioned back over 20 years ago, he realized that graphics advancements will eventually slow down and that they would need to offer something new with their consoles to make them standout outside of specs, and realized that the race to create the most powerful console making the most detailed games imaginable wasn't sustainable for success in the long run, eventually advancements will slow down while development costs will skyrocket with diminishing returns in graphics, which is why Nintendo's been on the same path of not caring about specs for 20+ years and focus on making innovative consoles that truly change the way games are played. This is why the Switch concept will continue to age like wine more and more if Nintendo sticks to it.

I don't agree with the diminishing returns argument. There is massive improvement still to be had, the problem is it requires complementary hardware and is expensive. The one aspect the ps5 crushes the ps4 with is lighting, but without OLED the difference is somewhat negated. 120 hz is superb, but requires a TV that supports 120 hz. The list goes on and on.

The days of noticing the benefits of a new system regardless of other hardware are gone. But with the right hardware the differences are stark.

I just upgraded to a rtx 4090, is slaughters the ps5.  But again requires a good TV/Monitor and of course isn't cheap.  

So diminishing returns exists, depending on how it is define, but graphics can get way better than seen on consoles.  

I honestly think both of you have valid points.
The jump from 1080p -> 1440p -> 2160p isnt gigantic, while the requirements in GPU grunt are huge.
And while 120fps is nice..... its not really needed (for alot of games) and does little for the "visual jump" javi mentioned.
Stuff like raytraceing... again its better looking, but again you can easily do without, and have much lower requirements on the gpu.

Switch 2, at say a PS4 level in hardware, will be able to visually punch above its weight, by simply not makeing use of 120fps, raytraceing, or trying for 4k.

I would call that deminshing returns.
When you can easily click a few checkbox's, that drastically reduce how demanding running the game is, without it being super noticeable visually.

If you just have enough money (powerfull enough hardware) these drawbacks (requirements vs visual upgrades) become much smaller issues.
The thing is, not many people can afford to buy themselves 4090's for their gaming hobby.

I think by next gen, the raytracing and high resolution, will have much smaller impacts vs today, simply by virtue of how powerfull the consoles then will be.

I honestly can't tell the difference between 1440p and 4k.  1440p is more than enough.  120 fps, I can't sing it's praise enough.  I honestly think 60 to 120 is bigger than 30 to 60.  The smoothness and response of playing at 120 fps is bliss.  

I view gaming similar to cars.  Is there a difference between a Ford focus and Porsche 911?  Absolutely.  Does a Ford focus get the job done and perfectly acceptable?  Absolutely.  Same logic with high end gpus.  

The biggest issue I see with console next generation is cooling.  I have two 140 mm intake fans, two 140 mm exhaust fans, 1 120 mm exhaust fan, cpu has two 140 mm fans and the gpu has 3 fans... and my PC is pumping out 40C air.  Compact consoles are going to be hard just because of heat dissipation.  

Ford Focus v Porsche 911 is waaaay overstating it, every man and his dog can tell them apart, you don't need to be a car aficionado.

Whereas most people will think they're looking at the same game when comparing spiderman 1 & 2.

You're super into graphical fidelity and that's great, but the average gamer doesn't have a clue about pixel count, geometry, path-tracing, raytracing vs baked, frame-rate/pacing, environment density etc.

You're underestimating just how well trained your eye is compared to the average gamer, by virtue of having a comparatively much higher level of interest on that side of things.

I think you are grossly underestimating the difference and the average gamer.  My wife is a casual gamer and only plays halo coop with me.  She immediately could tell the difference between her screen on a 3050 versus my screen on a 4090 just this past weekend when we played halo infinite.

It's a lot easier to spot differences via a side by side comparison. Also, I'd suggest 3050 to 4090 is quite a bit more than a generation apart. 

Even if not side by side the difference is massive.  For halo infinite, the trees specifically look awful on the 3050. 

And yes a 3050 to 4090 is more than a generation.  That was kind of the point.  Graphic jumps exist, it simply isn't apparent for consoles because the jump isn't cost effective.  A 4090 is a Porsche.  Native 4k, locked 120 fps, full RT and ultra settings across the board..  the average gamer can tell an immediate and massive difference.

There is still a long way to go before consoles hit diminishing returns.  People just think we hit diminishing returns because of cross gen games holding back new hardware and consoles being really underpowered this gen.  I assume it is because storage is super expensive and heat dissipation.  

Prior to my 4090 I had a 4070, that was still a massive jump over the 3050.  The 3050 is great example because it will be around where the switch 2 lands in power and supports DLSS, which isn't remotely as game changing as people think it is.  

The 3050 is stuck at low settings (cant touch medium, muchless high or ultra) and looks immediately worse because memory bandwidth.  The switch 2 is going to have a memory bandwidth bottleneck.  

You're contradicting yourself, you're saying that the graphics jump isn't apparent on consoles but then go on to say there's still a long way to go before consoles hit diminishing returns.

Diminishing returns, doesn't mean no returns.

And the fact that your example relies on a gap bigger than a generational console jump proves my point, not yours...

You also said yourself that many of these advances rely on good/modern/large displays. What proportion of the market has access to a large high-end display, capable of 120fps?