IMO the Switch is well worth the money, especially if you travel or use the handheld portion of it. If you use handheld, I'd spend a bit more to get the OLED... better screen and more storage (64gb). Which gets to the medium question. The Switch uses tiny cartridges... and with the 32gb, you can't really buy many digital games without expanding. Now the Switch can use fairly slow SD cards so you can expand pretty cheaply (I think 200gb is like $25 now), but you're relying on sd cards that are not the most reliable storage (I had one die on me a few years ago for my Switch). So I prefer the physical cartridge. The store has more games, but all the bigger games I just buy physical. Smaller games I buy digital.
Now saying all of that, signs are the next console for Nintendo will be out next year sometime in either the spring or fall. If you're not okay with that, might be best to just wait. Now Nintendo hasn't typically ported over games right away to the new system (though they did some with the Switch), so the Zelda games might be a bit before they port over if they ever do.
I'm old, so I prefer physical cartridges, but I know people swear by digital games too. SD cards are cheap, and if you're going to play the big multi platform releases on your Xbox, you could probably get by with 256 GB or 512 GB and have enough for the life of the console. Digital games routinely go on similar sales to Steam sales, and physical games can usually be found at some kind of discount on ebay or other second hand sites.
But, as Hench also points out, there are rumors that the next Nintendo console will be coming out next year (although who knows whether they will be able to make enough to go around judging by recent console launches).
Wii supported GameCube games, Wii U supported Wii games, 3DS supported DS games. It's really only the Switch where Nintendo didn't offer backwards compatibility, and I'm sure part of the reason for that was the unpopularity of the Wii U. I think Nintendo would be crazy not to offer backwards compatibility in their next console considering the install base and what their competitors are doing with their digital library.
On the other hand, I read someone supposedly in the know about graphic chips who said that if Nintendo wants to seriously upgrade their graphics capability in their console, they basically need to drop backwards compatibility.
So if you're on the fence between getting a Switch or waiting for the next Nintendo console, it might be best to wait for official Nintendo press on the capabilities of the next console. Maybe this comes out during E3 timeframe?
If you don't want to wait, I think there is plenty of value in the Switch lineup between first-party releases and multi-platform games you might want to play in portable mode while traveling, lying down, or whatever.