I suspect that some people living over there didn't bother applying in time or just thought it was too much of a bother. There seems to be a fair bit of paperwork to have to get in place and several hoops to jump though so, trying to do it quickly when having to deal with two layers of Spanish bureaucracy, missing a vital step seems a possible reason for their application to be refused. Late application could also result in missing the deadline. and the Spanish Authorities have no reason to treat them leniently especially when they voted to leave the EU.
https://www.gov.uk/guidance/residenc...ments-in-spain
Just found this article from 2019 which shows the mindset of expats at that time.
https://inews.co.uk/news/brexit/brex...ecision-256841
I am also wondering if other UK-expats living in France/ Portugal and other EU countries could face the same fate.