That's the thing. Despite history with Nintendo, people still doubted their chance just because they've been owned by Microsoft. History with Nintendo means jack**** when Microsoft could've simply refused. Obviously, previous Xbox head would've refused Nintendo's request back in the day, but that changed. The reason I brought Geno is the same case with Banjo. Both are relatively obscure in grand scheme of gaming. My point is that Banjo opened the door. So called touted Xbox exclusives like Ori and Cuphead ended up in Switch. Sure, you can argue that they are not exactly first party, but that still proves MS's change of stance... or openess. I doubt you were so sure that Banjo would join Smash before reveal. Although MS may ask bigger pie for Chief, I doubt they would be that stingy like SquareEnix was regarding Cloud.
Benefit of Chief's inclusion
MS: Benefit of advertisement, expanding player base
Nintendo: Potential to attract players who were previously interested in Nintendo
I am not saying these are solid reasons, but these are not completely baseless. It depends on Nintendo's calculation, but I am sure they at least considered this when they approached Microsoft for Banjo.
I may be biased, but my claims and theory are not completely without bases.