This was a grey area already when UK was still an EU member. EU was based on "free movement of workers, services and capital", but the residency rights of non-economically active citizens of other EU countries are ...complicated. You have the right to reside the first 6 months in another country as a jobseeker. In practice, nobody would know when you have entered the country, so you could always claim that you are within your 6 months and you are a jobseeker, so in practice deporting EU citizens was close to impossible, so countries didn't even try. But those Brits probably weren't staying in Spain strictly legally, even when they were EU citizens.