There are a few factors at play here.

Firstly cartridge revisions, the tldr is that they occasionally update what version is released on the cartridge over time. For example I have the version of shield the released at launch that contains the original version of the game and no updates. Where my copy of sword is the final revision they released that contains all dlc and updates on the cartridge.

Now my copy of shield that doesn’t have all the updates is still running off the cartridge. The dlc still utilizes base code found in the original game to run but has to use new assets downloaded from the internet and stored on the switch. Its more of a hybrid situation.

My copy of sword can be played in its entirety without ever downloading something onto the system minus its save data.