Recently, the YouTube channel ElAnalistaDeBits released a comparison video between the Switch 2 and Switch 1 versions of Xenoblade Chronicles 2. The Switch 2 version features comprehensive performance upgrades and expanded content, eliminating the frame rate fluctuations and blurry graphics that plagued the original on the Switch 1.
Comparison Video:
As seen in the video, there is a qualitative leap in smoothness during both open-world exploration and combat. The new version offers clearer visuals. The game supports 4K output in docked mode and 1080p resolution in handheld mode, although it likely still employs some degree of upscaling technology.
Video Screenshots:

