They expect students of a certain caliber. If the applicant exceeds their expectations, the university assumes the student is using this application as a “safety school.”

My kid, got waitlisted at UM, while a classmate with similar but slightly lower GPA and extra-currs got in. Maybe his essay wasn't as convincing or maybe they thought he'd snub them for his first choice. He didn't get into the dream school either but ended up in a great place at a school that likely fits him better anyway (and is cheaper since UM's OOS tuition is insane).

It's still frustrating as both his parents are alumni. Thanks to Covid and test waivers, 2021 seemed like a rougher year than normal to be applying to the higher end of schools.

This is sometimes referred to as "Tufts Syndrome" or "Yield Protection": https://en.wikipedia.org/wiki/Yield_protection

I used to live with an admissions officer - they've got data (and instinct) for "You're probably not going to go here". The same is true for graduate admissions in my experience.