I believe the issue is that Yuzu was patched to support TotK before TotK was released, which could suggest having used some proprietary code, or at least stuff that the devs shouldn’t have had access to.
They could also make the argument that very few people would’ve downloaded the game if the emulator didn’t exist or at least wasn’t being patched to support a game before it releases.
They definitely didn’t lose 1,000,000 sales. At the same time, I feel like it kind of crosses a line to be pirating a game before it’s even supposed to be sold in stores.