Nintendo, while aggressively litigious, do so to maintain the value and exclusivity of their IP.
Their games also never go on sale, and all sell really well over time, unlike many releases from other publishers.
The result is that Nintendo are able to release a solid cadence of high quality, first party games free of other forms of aggressive monetisation, maintaining the value of the games as art.
Nintendo as a publisher having high standards of what is allowed to be published onto their systems from 1st and 3rd party developers is what contributes most to quality of the games.
Devolver Digital is a publisher well known for publishing similarly very high quality games from 3rd party devs without being nearly as exceptionally litigious as Nintendo is going after everyone and everything that even remotely infringes on IP protections, however there is a point to be made that IP law in Japan functions very differently from the US and that plays some roll in how litigious Nintendo is.
Yeah it seems like if a kid says “It’s a me Mario” while playing on a playground some Nintendo lawyer is going to be there to smack their family down with a 30 million dollar lawsuit.