The hardware will still live on in 2DS and "XL" versions, though.

Nintendo is discontinuing the last of its compact, flip-top, stereoscopic 3D portables in Japan. The New Nintendo 3DS—which packs additional RAM, more shoulder buttons, and a second analog nub over the original system—is no longer being produced for the Japanese market, according to a message on Nintendo's Japanese website. The original 3DS, which was replaced by the New 3DS, was discontinued in 2014, alongside the original 3DS XL (called "LL" in Japan).

The move leaves the Japanese market without any standard-sized 3DS hardware that supports the system's once-ballyhooed stereoscopic 3D feature. Japanese players that want a system with a smaller form factor and screens are now stuck with the Nintendo 2DS, which doesn't feature stereoscopic 3D. The larger, flip-top New Nintendo 3DS XL is still being sold with a glasses-free stereoscopic display, but it seems set to be replaced by the recently launched New Nintendo 2DS XL, which omits the 3D feature.

Nintendo has been reducing its focus on the 3DS line's stereoscopic 3D capabilities for years now. Recent games like Super Mario Maker for 3DS go so far as to ignore the feature entirely, saying right on the box that the game "plays only in 2D."
Cutting off production of the smaller stereoscopic system could be seen as another nail in the coffin for the gimmicky (and costly) 3D displays. But it could also be seen as a recognition that the smaller 3DS' form factor has become less and less popular over the years. In the most recent fiscal year, Nintendo sold 1.38 million units of the larger New Nintendo 3DS XL in Japan, compared to just 120,000 units of the smaller New Nintendo 3DS.

North America shows a bit more relative interest in smaller New 3DS hardware—400,000 sales in the last fiscal year—but the larger XL still sold a much healthier 1.39 million North American units in the same time period (there's anecdotal evidence those numbers may be constrained by limited supplies, too). The cheaper Nintendo 2DS seems the more popular choice for small-screen Nintendo portables, selling 490,000 units in Japan and 770,000 units in North America in the last fiscal year.

It's not clear if Nintendo will shut down production of the standard-sized New 3DS in the rest of the world. Even if it does, though, it shouldn't be taken as a sign that Nintendo is abandoning the 3DS line in favor of the Nintendo Switch. The XL and 2DS editions of the portable line are still selling at a decent clip, and the release of the New Nintendo 2DS XL helps affirm Nintendo's stated commitment to continue supporting the 3DS into the future. That said, in the past we've seen sales for Nintendo's older portable systems quickly fall after the introduction of a new portable, so we'll see what effect the Switch has on the marketplace.
In any case, Nintendo's latest portable hardware move helps further simplify a portable hardware lineup that has become unwieldy, with six different options released since the hardware first debuted in 2011. Selling only three of those options in Japan (and four in North America) is probably plenty for the time being.