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Nintendo Switch 2 Game-Key Card Overview
(en-americas-support.nintendo.com)
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As I understand it, switch 1 digital games are console-bound, but you can migrate your whole console to a new device (such as if your switch breaks.). This was terrible and unfriendly, and why almost all of my family's switch games are physical.
I doubt "share once and let everyone play but the owner" was an intentional promise from Nintendo, but I'd have no trouble believing a tale about their DRM checks leaving open a hole like that.