Pulse Width Modulation is a method of simulating a change in brightness without altering the voltage supplied to a screen.
LCD screens such as the one in the regular Switch(es) also flicker, although the PWM of LCD screens tends to be around 1000 Hz or more — higher frequency, so more difficult for humans to perceive. OLED screens, on the other hand, usually have a much lower PWM frequency and can be more noticeably prone to flicker.
Essentially, when the user lowers the Brightness setting, screens using PWM turn on and off rapidly at a rate supposedly beyond human visual acuity. Viewers perceive the overall reduction of light output over time (including the incredibly brief periods when the pixels on the screen aren't illuminated) as a lower brightness.
The problem arises for people who are sensitive to this rapid screen change and can either perceive a 'flicker' or don't consciously note the effect but experience eye strain and headaches following extended use of such screens, especially in mobile devices or displays you look at for multiple hours at a time (at work, for example). Indeed, Notebook Check has an ongoing ranking of notebooks and other mobile device displays based on their PWM levels.
The video below demonstrates the phenomenon by filming the Switch OLED's screen using a camera filming at both 120 frames-per-second and 240 frames-per-second. Many phones are capable of this now, and we conducted similar tests ourselves — you too can see the effect by viewing the Switch OLED screen (or any other screen with a sufficiently low PWM rate) through your phone in the same manner.
Again, we stress that only when viewed through another device capturing the screen at a high frame rate will the vast majority of users be able to discern this flicker. For the small number of people who are sensitive to this, though, you can get a vague idea of how distracting and straining PWM screens can be.
For context, although this writer can't see the flicker on Switch OLED's screen at any brightness setting, I would say I'm susceptible to other forms of electric light flicker, specifically certain types of light bulb. It doesn't happen too often but put me in certain rooms — often with strip lighting — and I'll instantly be scrutinising other occupants and wondering how on earth they can stand spending any time at all in such interminable conditions. It's not something I've spent a bunch of time researching; I simply get the heck out of the office or elevator or wherever it is as fast as possible.