This isn't new though. I already mentioned Batman Forever on the Game Boy but since you mentioned Mortal Kombat, the Switch version is a much better port than the original MK port on the original Game Boy, or the Master System MK2 port, or the Game Gear one. Because these don't only look like shit, they also play like shit. At least the Switch version plays and runs fine.
And let's not even talk about the arcade ports on the 8bit home computers or the Amiga/Atari ST. Games designed for much more powerful hardware, hastily and sloppily downgraded was the order of the day. The visuals and frame rates were always shit but you hoped one game out of ten would at least play fine. You also had a lot of bad arcade ports on both 8bit and 16bitr consoles as well. And like you say, these games didn't only look bad compared to the arcades, they also looked bad compared to any good looking original game designed for those systems.
Even on 16/32bit consoles you had the same issues Again, something like Mortal Kombat on Switch is a much better deal than After Burner, Space Harrier or Outrun on the Genesis/MD (and they were like the best ports compared to other systems). A lot of the Saturn/PS1 arcade ports also suffered the same "MK on Switch" issues. The Mortal Kombat ports on Genesis/SNES were the exact same case as the Switch port. They looked heavily downgraded and not very good looking for the hardware either, but they played fine. Though MK2 and 3 did somewhat look good on those systems as they got a much better downgrade job. And the Street Fighter 2 ports on SNES/MD looked amazing for those systems, despite the downgrade from the CPS hardware.
The main reason is because Switch hardware is powerful enough to run decently a 2D fighter, as these are as basic as it gets in terms of gameplay. There is nothing really elaborated here, with a visual downgrade, you could run the core of these games on Dreamcast.
However, the gap between 8 and 16 bits consoles was huge for a lot of reason, and 8 bits consoles were absolutely not suited for fighting games for several reasons, and I can talk in detail for the MS/GG :
- sprites limitation of 64
- sprites limitation of 8 per line
- only one single palette available for sprites on MS/GG
- impossible to dynamically mirror sprites on MS/GG
All of this means that fighting games on these consoles were EXTREMELY challenging. You had to waste a lot of space in the ROM because you had to store characters facing both LEFT and RIGHT. And then you get only a single sprite palette for both, that you have to split between player 1 and player 2. So this means that the first character uses colors 0 to 7 and the second colors 8 to 15 (I am simplifying here). So again, you have to store graphics using the first half of the palette, and then again graphics using the second half of the palette. Dynamically changing the tiles when drawing was maybe a possibility, but this means making your engine slower (on top of decompressing the visuals in real time). I suppose that the RAM is used a lot in these games to prepare the visuals in advance.
Still there were some excellent fighting games on MS and especially GG, I will have to take a look at how they circumvented these limitations. Thinking of Masters of Combat, Ninku I & II, Fatal Fury Special, Sam Sho and both Power Rangers games.
Mortal Kombat is both sprites and background based. This allowed for huge characters. Maybe they stored the characters only facing right, and when a character is facing left, it becomes tile based and uses symmetry (MS and GG are quite fast at drawing BG tiles). This would make the most sense (edit : after checking this is not the case, the latest character to have done a move replaces the one as sprites, very interesting). And the great thing with this is that you get one character using the sprite palette and the other one using the BG palette, so no need to duplicate your characters. Despite these ports not playing "well" by your standards, I find them to be some of the most ingenious I have seen.
But in the end, what I mean is that Switch getting decent 2D fighters is much less challenging than 8 bits consoles getting 2D arcade ports, because the bare minimum hardware to decently run such games was passed more than 30 years ago when we reached 16 bits consoles and larger ROM sizes, and when we reached Dreamcast for 3D fighters.