I honestly don't know why are you guys confused about the different cartridge types.
It works like this from what I've gathered:
- Switch 1 cartridges contain an image of a Switch 1 game, compatible with Switch 1 and Switch 2 in "Switch mode".
- Switch 2 cartridges contain an image of a Switch 2 game, compatible with Switch 2 only.
- Switch 2 Edition cartridges contain an image of a Switch 1 game along with an image of a Switch 2 DLC. Think of the DLC part as something like a BPS patch which a Switch 2 then applies to the game image, containing the graphic updates, additional content (if any), and whatever necessary code rewrites are done so "Switch Mode" won't have to be used.
- Switch 2 game keys don't contain images, just whatever keys are needed for the CDN to provide the actual game image for download.
The notch on the cartridge serves to tell the Switch 2 to not use Switch mode (i.e. invoke the in-built emulator).