MVG's video works on the assumption that you cannot create a compatibility layer and need to recompile on a game-by-game basis. Hopefully this is not what we end up with.
If that were the case there wouldn't be discussion about the complexity of the BC solution. A recompilation is "relative easy".
What seems to be implied is that the Switch is going to run the CPU code natively and have a translation layer where needed for non-compatible shaders.
Running native CPU code that is more and less performant at the same clocks due to the change in CPU is tricky.
Running a GPU translation layer that can dynamically substitute replacement shaders that have been identified in advance as well as identify non-compatible shaders, decompile then, replace the impacted calls, recompile and run w/o causing an issue, and run non-impacted shaders w/o changes is really tricky.
Running both of those at the same time w/o impacts to the end user when both sides of the CPU/GPU pipeline expect data from one another at specific times is amazingly tricky.
I can see why others are having trouble finding a graceful analogy (assuming I've even correctly identified the issues). . . The closest I can come up with is driving a car where you've swapped out parts of the engine to improve performance, but you haven't figured out the right engine timings.
With wrong timings your engine with perform badly (bugs/frame dips, or worse, potentially break (crash). Once you dial it in, great, hopefully you see the performance improvements you wanted from your modifications.
Now imagine having to swap different parts all of the time or even while driving the car and yet keeping the timings sound so nothing breaks.
I'm suddenly seeing the value and complexity in Microsoft's approach. Running everything in a VM trades some power for not being bare metal for the promise that Microsoft will handle changes in CPU or GPU. To use the car analogy, it's like Microsoft has created a car that can run multiple fuels and yet keeps the car running well no matter what fuel you put in the engine. Different octanes of gas (XSS, XSX, X1), different levels of ethanol (xBox), heck it even runs diesel (360).