More can go wrong with digital than you think.
1. You lose access to your games if your account is compromised. You're also not technically purchasing the game, just the license to USE the game. Purchasing physical means you OWN the product.
2. if eShop servers close or die, you lose access to your game. Physical, you only lose out on updates.
3. Higher cost of purchase due to needing external storage (mSD cards). This one isn't much of a point, but you don't need as much external storage with physical.
It’s true that you are only buying a license, and that if the eShop goes down, you will be unable to re-download the game, but this is a bit of a misrepresentation of the issue. First off, you may lose the ability to download the game if the eShop goes down, but you don’t lose access to the game you’ve already downloaded.
Moreover, there are many more practical ways to lose access to a physical copy. That is to say, sure, the eShop *could* go down, but it’s not feasible in a reasonable amount of time. You can still redownload games you bought on the Wii now. The support will likely go on for a long time. I would wager that 95% of people are more likely to *lose* their cartridges before the Switch eShop goes down.
And, of course, you can break, damage, or lose a cartridge way easier than you can lose a download. If you do lose or damage your cartridge, you *must* buy a new one. You “lose access” to it. With digital, you can download for free for the indefinite future.
So, it’s not so much “digital has so many downsides that people don’t notice”. Assuming society doesn’t collapse and Nintendo doesn’t turn evil, digital provides much, much, much more practical security than physical. Not to say physical is bad. Both have benefits. Both are, in practical terms, essentially equal in these terms, with the only major differences being price and convenience.