My personal favorite is Microsoft discouraging local Minecraft servers with the rational that anyone could type anything on them! Who knows what you and the people you explicitly allow on your server might type!
But your switch example is worse, I think.
That's excusable though. The DS was released in 2004, with WEP being deprecated only in the same year [1] and most consumer routers / APs of the time not getting updates to WPA anyway.
I do understand where they're coming from, it's brand safety 101 - they don't want to risk the PR disaster from incompetent parents coming into their child's room and seeing n-bombs dropped into the Minecraft chat, leading to the parents shitstorming Microsoft for not moderating the chats when Microsoft for once isn't responsible for not moderating.
I think that legitimate fear is also why so many games removed self-hosting servers. I can remember from the UT2004 days that there were a lot of questionable things said in online chats... obviously sexism, but also lots and lots of racism and antisemitism.
Maybe, I’m misunderstanding the initial statement, but if this were case, why ban local servers and not public, internet accessible servers? I promise there’s a much higher chance of that hypothetical happening on those.