The success of Captain Toad and Hyrule Warriors in 2014 persuaded them this was a good strategy. If you followed the financial briefings you could see Iwata hinting, in his last few appearances, that this would be the direction for riding out the life of the Wii U and hopefully keeping the existing install base fed. It does seem to have backfired, creating the perception that all we get are spin-offs and budget titles.
The point about PM:CS being low-budget is important here. This is a game that was stuffed into a one-minute segment in the middle of a whole barrage of one-minute segments in the Direct, without a separate trailer of its own or a big spotlight slot like a lot of the big announcements or surprises that fall outside a Direct's time frrame of coverage. (Compare this to how Fire Emblem Fates or Hyrule Warriors were revealed—"Please, look at this.") The expectation is for this to be a minor title, closer to Kirby and the Rainbow Curse/Paintbrush in terms of where it fits. Which is fine; that game turned out well, and even came with a lower sticker price. It is a little sad that Paper Mario is being treated as a fill-the-schedule series, but experimental titles that are charming if not particularly ambitious fit this category well, the category of the slightly lower-cost single-player diversion.
I reckon the game was announced this way to manage expectations, and even so, the reputation of TTYD as a major classic of the GameCube era is so enduring (rightly so, in my view) that we all have this idea that anything less than a marquee system-defining RPG is an insult to the Paper Mario name. View this announcement in context, and it should be clear that this expectation may be too high. The Paper Mario brand means less to Nintendo than it means to us.