It’s because Yuzu was profiting off of their development with a Patreon. Keep emulators FOSS and there’s no profits to claim.

Also, because it’s a settlement and not a ruling, it’s not setting a precedent for future lawsuits. Courts historically put a lot of weight on legal precedent, to help make rulings consistent. If one court interprets a new case in a certain way, similar cases in the future will likely look to that first case’s ruling for guidance.

So if one ruling had decided that emulation is illegal, then subsequent lawsuits would have been much much easier for Nintendo. Because Nintendo could basically argue “we already proved emulation is illegal in that previous case, so now we don’t need to do that part again.”