Nintendo, while aggressively litigious, do so to maintain the value and exclusivity of their IP.
Their games also never go on sale, and all sell really well over time, unlike many releases from other publishers.
The result is that Nintendo are able to release a solid cadence of high quality, first party games free of other forms of aggressive monetisation, maintaining the value of the games as art.
I agree they care about the perceived quality of their product, but don’t think them litigating has anything to do why the product is of the quality it is.
I would guess their litigiousness is a holdover from the 90s with them being afraid of being branded as “generic” because every parent/grandparent called their video games “the Nintendo” and they don’t want to be seen as not being protective of their IP as to allow unlicensed products. Maintaining the perception of quality from their products.
I think you’re conflating correlation and causation. They release good stuff, and don’t want to be associated with anything without their approval / lose legal ground of something of theirs, therefore they’re lawsuit happy.
I’m no expert, but I think it’s also a quirk of how copyright law works in Japan. Apparently if you don’t consistently restrict other people from using your stuff, you weaken your case when you DO try to stop it.