They're on little 3DS-like carts.
And I am hoping it will play DS/3DS games as well.
Rumor is the DS line will stick around, being the $100 kid friendly system. I am guessing Nintendo would keep a distinct gap between the two systems if this is true, to continue to make the 3DS seem somewhat appealing as a standalone product.
On the other hand, if they could launch the Switch only unit at $250, with no games and minimal accessories, that could be a low enough entry point to make parents move away from DS. At that point, DS compatibility would make sense, just from an eshop perspective and compatibility with old games appeals more to parents than kids anyway. However, the $300 base / $400 bundle pricing that is rumored seems to price the system out of the kid toy range.