The switch 1 situation also wasn't great with reports of switches being bricked or picky about 3rd party docks. I guess that's why they stopped trying to be compatible at all.

There was one dock which did this, and firmware on the Switch 1 quickly worked around the problem the Nyko dock had, and Nyko released new hardware which prevented the problem that the Nintendo Switch firmware update worked around.

The Nintendo Switch wasn't super picky about docks, but in order for external display to work, the dock had to support the mobile DisplayPort protocol that Nintendo used, "MyDP" instead of vanilla DisplayPort, which is what most devices supported at the time the Switch was released. Again, that wasn't a non-compliant thing on the part of the Switch, the Switch just used a technology that wasn't commonly used by much else, which is very commonly done by Nintendo.