After playing with the OLED Model for a few days, I'm fairly confident that the "Console-Screen Colors" setting is to select a color space. The "Standard" mode represents the sRGB color gamut, giving you the colors resembling what's on the older Switch models. The "Vivid" is akin to the "Native" or "Wide" color settings on the OLED TVs. Since the OLED Model is equipped with a Samsung V series panel, and most phones using a V series panel are rated for the P3 color space, it's a good bet that "Vivid" mode represents the P3 color gamut.
Check out
this webkit.org webpage to see the distinction between sRGB and P3 color spaces. If your display supports wide color, you should be able to see the WebKit logo in the middle image:
The P3 color gamut offers about 25% more colors than sRGB. So the redder red that you see on the OLED Model isn't an
oversaturated red, but a
new red that the older Switch models aren't capable of displaying. Here's another webkit.org example:
To illustrate this, I opened a Switch screenshot in Photoshop, and changed its color profile from sRGB to Display P3. As you can see below, despite the two screens being uncalibrated (and the intrinsic difference between OLED and LCD), the result of color profile change correspond to the toggle from "Standard" to "Vivid" on Switch OLED.
(You'd see a much bigger difference between the two sides when viewing the image on a wide color display.)