As expected. - Just hopefully Nintendo doesn't change the display aspect ratio so we can get proper scaling...
Gameboy had: 10:9
Gameboy Advance had: 3:2
Nintendo DS had: 4:3
Nintendo 3DS had: 5:3
Switch had: 16:9.

Every time you brought a previous console forward you had stretching... Or part of the display had bars.
Hopefully it's 16:9 for the Switch 2.0 and not something like 16:10 which we are seeing on PC handhelds like the Steamdeck, Aya Neo, Legion Go etc'.

And hopefully Nintendo uses proper integer scaling if they opt for a higher resolution display. - Although I would be fine with a 720P panel to conserve battery life and keeping everything 1:1 pixel scaling.

Bringing over Switch Online is a smart choice, Sony and Microsoft learned that it's better to bring forward the hard work on their previous generation consoles online systems and stores rather than rebuild everything from the ground up again. - Hopefully it means a more refined system over time... Because it's certainly not "refined" as it stands currently.

This is what the old rumor was.
Switch cartridges were supposedly able to also be used on it.
Which was part of the "new switch is backwards compatible" rumor.

We now have nintendo's confirmation that it can play Switch's games.
Now we just need to wait, and see if the cartridge part turns out true too.

Was to be expected, no surprise. Next question.

physical and digital?

It is not bc if physical does not work. The same can be said for the xbox.

This goes without saying but confirmation is always nice

BC has always been the default unless a system has wildly different architecture, is too weak for emulation or features distinct storage media, Switch 2 did not feel in threat of any of this. 

Why do you think that there aren't higher capacities possible in the same cart format?

Even smaller microSD-cards are available up to 2000 GB.

So 20 - 200 GB Switch carts should be easy by now.

Prices for flash memory have also gone down a lot since the Switch launch in 2017.

microSD-cards are starting by 5 cents per GB... and Nintendo will probably get better prices from the manufacturers.

The schematics of the supposed Switch 2 cartridges was leaked and it is exactly that. The current Switch cartridge has a small notch in one corner; the new Switch 2 ones will be the same size, but with the notch in a different corner. The Switch 2 is then designed to accept Switch/Switch 2 cartridges with notches in either corner, but of course the Switch original systems will not allow you to jam in a Switch 2 cartridge because of that notch difference.

Switch 2 cartridges are also supposed to be a world away faster, which can easily be done as well while keeping the slot the same. Just look at SD slots and their speed increases over the years, while still maintaining backwards-compatibility with past SD cards.

I'm assuming with digital libraries (like what I have), that it will "just work" upon logging into the same Nintendo Account on the Switch 2. Your games will just show up.

Not having backwards compatibility would've been one of the worst mistakes Nintendo has made in a long time.
Switch is tracking to be the best-selling platform in gaming history and is the most profitable one.
PS2, GBA, DS, 3DS, and PS5 all would've been hurt without backwards compatibility. I didn't say PS3 because it had such numerous problems for the first several years that launching with no PS2 support (or PS1) probably wouldn't have hurt it regardless. The price gap between PS3 at launch and a PS2 Slim at that time was extreme.
This better not be a half measure by Nintendo. The days of backwards compatibility playing all or almost every game at the same performance as the original hardware is done. Xbox One, PS5, and Xbox Series X/S all boost games. Imagine Zelda and Xenoblade boosted on Switch 2.

Smart to send this message out before the holidays.

For customers eying to get the Switch2, they now know they don't need to hold back on buying Switch games.