Yes, they are fucking huge. So, unlike iPhone, you can expand the storage.
You saw how irate people were when the $300 price was announced. Now imagine it was $350 or $400 to include more storage.
I'm not excusing WB's shitty practice here. Shipping on a smaller cart to punt the cost to consumers in other ways is a terrible business practice, even by WB's standards. If that's really how things are going to be from 3rd parties, then, yeah, Nintendo should have included more storage and increased the price of the system.