According to an interview published on Nintendo's official website, the reason why older Nintendo consoles such as the 3DS and the DS, or the Wii U and the Wii, had full backward compatibility is because of how they were made – the DS hardware was implemented into the 3DS and the Wii hardware was implemented into the Wii U.
However, this isn't the case for the Switch 2, as it is not equipped with its predecessor's hardware. For the Switch 2, the focus was on enhancing its performance, which meant that its compatibility with the Switch was a lower priority for the developers. The approach to hardware design was vastly different from Nintendo's previous game systems, which is why it was difficult to achieve the same level of backward compatibility as the 3DS or the Wii U.
Therefore, a new technology is being used to run Switch games on the Switch 2. If something like a software emulator were to be used for the Switch 2, it would have to be run at full capacity and its battery wouldn't last long, which is why Nintendo implemented a new technology that they describe as a mix between a software emulator and hardware compatibility. According to them, the process of converting game data for Switch to run on Switch 2 is being performed on a real-time basis as the data is loaded. Due to the introduction of this new technology, each of the 15,000 Switch games is being checked for possible compatibility issues one by one – from whether they boot up, to the gameplay itself.