Is this a replacement for Virtual Console? Will Virtual Console return?

There are currently no plans to bring classic games together under the Virtual Console banner as has been done on other Nintendo systems. There are a variety of ways in which classic games from Nintendo and other publishers are made available on Nintendo Switch, such as through NES & Super NES - Nintendo Switch Online, Nintendo eShop or as packaged collections.

NES & Super NES - Nintendo Switch Online provides a fun new way to experience classic titles, thanks to enhancements such as added online play and voice chat via a smartphone app.