They must realize Rule 34 is a thing, and from what I've seen and heard the new game has a lot of adult in-jokes. But whether they expected porn or not, I'm glad they gave us trap Link, lol.
Nintendo is generally very family-oriented, and although you do occasionally get a couple adult references, they're usually clean. Breath of The Wild, from what I've seen, is more lenient, there's lots of innuendo and subtle adult stuff.