The universe of imaginable software is way larger than the galaxy of viable software.

Viable means a large enough market to justify the fixed cost.

Software is expensive to create and distribute, so the market has to be reasonably large to break even and become viable.

But if software becomes much cheaper to create a good enough answer for a niche, then do we see more nichification?

As the cost of creating good enough software declines, the size of viable niches also declines.