I wonder if this makes emulation more difficult because how are you going to get games for it?

If that's the case, then I guess Yuzu 2 is just waiting for its moment now. I wont buy a Switch 2 if they are pretending to end the physical market. Nintendo is the one with the worst record when it comes to digital purchases, and if I wanted to deal with digital stuff, I would stick to Steam

They could simply make them digital purchases actually cheaper than physical versions if that were the case.

The elephant in the room is that companies truly hate that physical media can be sold many times on the second-hand market, cutting into their potential revenues. Cheaper digital purchases would curb that, but they're just too greedy to make it happen.