What is appealing to a 5 or 6 year old is very different to what's appealing to well, anyone else. I'm sure they tested it on them, and I think slab like devices are easier for kids. It's no coincidence that this release coincides with the release of the new pokemon. They want to make sure they get that demographic which probably treats nintendo handhelds as a pokemon machine. Also, a great way to get young gamers on nintendo products.
As a device it's also cheaper. But you're right I too thought it was a joke. The thing does not look ergonomic and is hideous. I feel like 0 time was spent in the design.