Obviously a lot has changed since then. Now they do it to protect their own IP and investments.
The lockout chip is what made the "seal of quality" scheme feasible in the first place. If alternative games were widely available, Nintendo wouldn't have had nearly as much leverage to strongarm with.
Also, look at the timeline and the history behind Tengen which was essentially a company created by Atari specifically with the purpose of publishing their games on Nintendo and used essentially corporate espionage to get the underlying MPU used for the CIC logic that was a corporate secret. The actual lawsuits get filed a few years once Nintendo had enough evidence, but it was going on from the start of the lifespan of the console.
The NES was released in North America in late 1985. By 1987 there were commercially available games (from Tengen) that were playable without the permission of Nintendo. Tengen was not the only one or even the only method being used to break that console at that time.
And then there is Game Genie, which effectively can work around all of these problems. Sure, they included some logic to play nice and let the NES check the CIC again, but you can work around that with a game genie code itself! In the early days Game Genie and GameShark devices were well known for being vectors for piracy and they leaned into that.
*EDIT* This doesn't even get into the VAST array of devices that existed to clone cartridges or adapt floppy drives similar to how the Famicom did. At worst those required a stupid dummy cart to sit in them that never gets removed or the manufacturer did that for you and put a CIC in the device. Some used various attacks mentioned earlier to work around even having to do that.
Microsoft only has (de facto) control of the Microsoft Store.
Microsoft doesn't seem to care (or it's legally dangerous to care). Nintendo does.
nintendo doesnt have to make the switch open source to make it open, they just have to allow people to make whatever the hell they want for it, but their business model depends on it being locked down (closed)
Given all that this doesn't feel like a plea to let people publish their games. Just a thinly veiled port begging.
Even if they could, it wouldn't let them play switch games better. It doesn't solve the clear problem here that is the super technically minded people wanting to play Mario and Zelda in 4k/60.
"Open" doesn't mean "open source" although in the case of the Steam Deck, it is both (not including the Steam application, but as I mentioned you can use the Steam Deck for whatever you want including removing the Steam application, so it's not a requirement or a blocker. I know someone who installed their own Bazzite flavor that has Steam removed and only uses Lutris to install GOG games).
Also Steam Store's requirements are only for games listed in their store. As has been mentioned, this is not a requirement for running on the Steam Deck. This is in sharp contrast to Nintendo.