I think the obvious choice would be to go the "Smash Ultimate" route, but I think I'd like to see them sort of go back to the basics and start fresh...
SMASH WORLD TOUR
* First, cull the roster---it's too bloated in a bad way. I'd go for only characters who are unique individuals. I'm thinking you'd have 16 starting characters: Mario, Luigi, Peach, Daisy, Wario, Waluigi, Yoshi, Birdo, Toad, Toadette, Donkey Kong, Diddy Kong, Bowser, Bowser Jr., Kamek, and Petey Piranha. Then you'd have eight unlockable characters: Rosalina, King K. Rool, Pauline, E. Gadd, Poochy (surely he can drive?), King Boo, Nabbit, and King Bob-Omb.
* I'd return to the back to the basics approach for Karts---I'd keep the glide mechanic, as that offers up some cool scenic moments, but I'd remove bikes, underwater segments, and anti-gravity. I'd focus on getting the feel of the Karts JUST RIGHT, and make it tight and precise. I know some people like customization with Karts, but personally I'd like to see perhaps more of a focus on the characters again so I'd go with each character getting their own Kart custom tailored to their personality. Maybe you could unlock alternate colors for each Kart to spice things up, however---like maybe Mario's Kart is normally Red and Blue, but there's a Red and White Fire Flower-style design as well.
* The game would feature 32 all new tracks divided into two sections. I'm not interested in retro tracks again right after Mario 8 brought so many back, so I'd like to see them take a break. 16 of the tracks are "Mario" tracks, while the other 16 are based around real-world locales. After seeing Mario trekking around a realistic city in Odyssey, I realize that might be pretty cool to see in Mario Kart as well. You could still have the tracks "gamey" though, don't make them plain Forza-style tracks or anything like that, but a tad more down to earth. There are two Grand Prix modes, one focused on Mario tracks with Items, and one focused on Real tracks without Items and more focused on pure skill.
* Single Player Mission Mode. Based around Spirit Battles from Ultimate, as well as the single player mode in Sega All Stars Transformed. You navigate a Mario-style worldmap, and meet minor Mario enemies and species who give you challenges---these are races with special requirements like navigating through rings, collecting coins, and lots of other little events beyond simply racing the A.I. These races also would use special abridged versions of the main courses in some cases. At the end of each world is a boss, which is like the Boss Battles in Mario Kart DS.
* Collectibles since they're doing that a lot with Korok Seeds/Spirits/Moons. I think little "penny racers", like the ones from that Mario Party 1 mini-game, a little toy car with a bobble head figure sticking out. There'd be like 100 of these to collect, and in Multiplayer you can equip one granting you a special ability (an increase in stat, beginning each lap with an item, etc.), with them representing Mario characters including more obscure ones like Wart and Tatanga. By hooking up Switches, you can create a race track for them through each of the Switch like the Super Mario Party Tank Mini-Game, and race them around like the Mario Part 1 mini-game.
* Really nice local multiplayer and online, including the ability to adjust items and the like.