Why Does this Short?
That is not how you connect a motor to a switch. You connect everything in series like so:







simulate this circuit &ndash; Schematic created using CircuitLab

Such that opening the switch stops current from being able to flow into through the motor.

In your circuit, when the switch is closed the switch is much much lower resistance than the motor so most of the current goes through the switch instead of the motor. If the switch were zero resistance, all of the current would go through the switch and none would go through the motor. The current tries to take the easiest path through the circuit. The easier the path is relative to the alternate paths, the higher the proportion of the current will take that easy path. Therefore, the motor gets less power.

It short circuits because the battery tries to drive enough current through the switch and motor parallel combination so the voltage across it equals the battery's own voltage. That is how equilibrium is reached. With the small resistance of the switch, this takes a lot of current. More current than the battery can safely provide but it still tries to do it anyways (and heats up in the process). The battery tries so hard that it starts to buckle and the voltage sags.

You can now look at why the motor is running with less power from two different perspectives:

(a) The battery voltage sagging means less voltage across the motor so less current can be pushed through the motor.

(b) Most of the current produced is diverted through the switch around than the battery.

So it's really the same effect looked at from two different perspectives since you need sufficient voltage to push a certain current through the motor (or any load). They're not independent and you cannot have one without the other.

When the switch is open, all the current flows through the motor so it operates normally.