What Labo is is a weird way to diversify their audience in a pretty cheap manner. Yes, it's "freaking cardboard", but it's a material that no other company ever considered. If this were plastic or something it would have been seen as a weird cash-in, but semi-socially acceptable because of the more durable material.
Much like Hey Pikmin, Nintendo has come out with things that no one really asked for. I don't see it being the next big thing for Nintendo or the Switch, but I don't see it as a detriment if it fails. We've seen plenty of games fail, but the venerable Nintendo keeps surviving and thriving in the era of "MUST BE BIGGER AND BADDER HERE'S VR AND SUPERCOMPUTING HARBLGARBLHARBLGARBL"
When I watched the trailer, I had this stupid ass grin on my face as everything kept building up. It reminded me of the days I used to build things with Legos and play that way. It's a different creative outlet with a material that is easily replaceable (just grab an exact-o knife and old cardboard boxes - and the plans are supposedly going to be available from Nintendo). The target audience seems to be for kids and "kids-at-heart". And the software also seems to show how all these cardboard contraptions work, teaching basic engineering skills.
It's Nintendo being Nintendo...and I think they're being brilliant.
TL;DR - We don't need it, but it looks pretty awesome, and it won't put a huge dent in the armor of the Switch or in Nintendo's budget. And yes, I'll walk around in a mech suit made of cardboard if it allows me to transform a virtual giant robot into a vehicle.
