It is less bad than code-in-a-box. That's not a high bar, but it is less bad.
There are two main reasons to buy physical:
Ability to share, trade, and resell your games. These key cards still support this, whereas code-in-a-box did not. So, slightly better.
Then there's the peace of mind that your games will still work in the distant future. I think if you ask most people who primarily buy physical, myself included, we'll say this is the main appeal of physical games, and the big reason why key cards don't feel acceptable.
Some day when the servers eventually go offline, these key cards will become bricks. It's not a question of if, it's a question of when. We have no idea how long Nintendo will support them for, and they're not going to hard commit a timetable out loud for us. But we know it can't be forever.
But even for standard physical games, there is some uncertainty regarding their long-term future that I'm not sure people realize. When those servers eventually go online, your cartridge only has 1.0 on it, you won't be able to get patches. That's better than a brick, but for a lot of games that's probably not the version you want to play.
And then the even darker concern is bit rot. No form of physical media is permanent. Every disc and every cartridge will eventually degrade. Worse yet is that for many forms of media, we don't even know how long they're set to last for, we only find out once some of them start to fail. Cartridges are generally better than discs, but beyond that we truly have no idea how long Switch cartridges should be expected to last.