Of course in business world it makes sense. The Switch itself is a portable and they put a tv out because they wanted to leave behind the home console business. It wasn't making them enough money as their handhelds. So of course they were going to double down on this portable business even more. I knew it was coming and so did a lot of people. But I was still hoping they'd keep that one tv out feature in.
As for why would people get the Switch instead of the Lite, well because it has a bigger screen, separate joycons, rumble etc. They can release an XL version with a slightly bigger screen around 7" and phase this one out. People buying the Lite with tv out would want it for the smaller 5.5" screen and more portable factor, but still would like to connect to TV if they feel like.
If you ask me though, from my point of view, the Lite made the Switch redundant. If you release a portable only for people who don't care about TV, then release a home console only for people who don't care about portable and always keep their Switch docked, as the current Switch feels like it's a jack of all trades, and does justice to neither home console nor portable. But that's my point of view. And business is business, as usual.