You're the one who doesn't seem to understand the law. Circumvention tools and the act of circumvention is by default, not permitted. Some exemptions are permitted for very narrow use cases, and then some general exemptions are made for other purposes such as smartphones. The supreme court has stated on the record that video game consoles are not general purpose computing devices, so the jailbreaking and interoperability exemptions don't apply. In other words, hacking your Switch is illegal except for very specific purposes (an example: hacking it to use the Xbox Adaptive controller if you're physically impaired is likely legal. If you're doing it to find bugs to report to Nintendo, it's also legal. It's also probably legal to hack it to fix those bugs yourself. Note that when I say bug, I am referring purely to a software malfunction. A lack of a "feature" is not a bug.)
Regarding "backups" - they must be made from a physical device. You are permitted to keep only one copy at a time across all your devices. You are not allowed to utilize this backup as a substitute for the original media unless the original media is damaged, destroyed or rendered inoperable. This is the law. Yes, it is stupid.
Moreover, as much as I hate to be the bearer of bad news - any USB loader is a circumvention device by definition. The DMCA might permit circumvention for some purposes, but it doesn't permit sharing of information on how to circumvent or production of tools for the purposes of circumvention. Nintendo had every right to shut down DragonInjector. They likely did so because it was a for-profit venture, even if the board and files were FOSS.
The main reasons Nintendo hasn't gone after Atmosphere are A) It contains effectively none of Nintendo's intellectual property B) it provides no facility to circumvent copyright protections on games without 3rd party patches they themselves do not endorse and C) They're not making any money off of it, so Nintendo is unlikely to be able to extract anything in a lawsuit.