An NSP file is typically downloaded directly from the Nintendo eShop for official purchases, but in the context of the Redeemer: Enhanced Edition ROM scene, NSP files are also extracted (dumped) from a legally purchased digital copy by users. This digital backup can then be used with custom firmware on the original hardware or with emulators on PC.
It's helpful to distinguish NSP from other common Switch file formats: Redeemer- Enhanced Edition ROM NSP UPDATE - S...