To me this reads as 'We might push an update that bricks your console should you have hacked your device." Which has been a risk when modding consoles for at least 20 years now. I don't think it refers to there being an actual kill switch. Just more legalese to further scare people from doing to and to reduce the chance of getting sued should it happen.

That said, with so many games being digital or gamekey only, and later games probably requiring system updates anyway, just being blacklisted from the Nintendo servers alone would already gut a console's functionality to the point it might as well be seen as one.