"The dock may not contain any processing power, but it does allow the Switch to run at higher speeds to deliver better performance. I believe you need to consider the entire content of the package, and it's really the Joy-Cons that make it a hybrid system. The Joy-Cons are as crucial to the system's identity as the gamepad was for the Wii U and are somewhat comparable to the Wii's motion controls, though maybe not to the same extent. They enable the system to be played as both a handheld and a home console right out of the box, and the entire system is designed to facilitate seamless switching between the two modes.
This sets it apart from handheld systems that offer an output option but require additional purchases or even third-party components to function properly.
I don't think the Lite should be viewed as "doubling down" on the portable aspect. It's more like creating a separate product for those who aren't seeking the hybrid functionality. They probably didn't produce a home-only version to avoid having too many SKUs and options that might confuse consumers. Also, it's doubtful whether a home-only SKU would lead to increased sales. The only advantage of a home-only SKU would be a slightly lower price. The Switch Lite offers other benefits beyond the lower price: it's much more compact, lighter, and portable than the regular Switch in handheld mode.
I understand the point you're making, but when you take into account all the contents of the box (including the dock and the Joy-Cons), I think it's fair to categorize it as a hybrid system rather than simply a handheld with an output function.