Sometimes this just happens by mistake. The literature is vast and people rediscover things fairly frequently that they honestly didn’t know existed. The related work section is a good faith effort to contextualize your work in the space of extant works. You will not know every work even seminal ones (it happens, especially if it came out a few decades beforehand), and you don’t have space to include everyone. Sometimes you’re coming from an adjacent field that doesn’t literature from other sources. I study a lot of control theory, and optimal control theory is something that shows up in engineering and economics. An economist writing on the topic may not be familiar with all the engineering literature. Recently, with the machine learning explosion, I’ve come across reinforcement learning papers from time to time where they rediscovered something from optimal control and are proposing it as a whole new thing because, well, they don’t know a lot about the control theory literature. Personally, I don’t think it’s a large problem because it brings the idea to a new audience and it’s impossible to know everything.

Another aspect that makes it difficult is that different people even in the same field use different terms for the same thing. As an example, engineering optimal control folks like to optimize cost functions, economists might refer to that as the utility instead, and RL folks like to use rewards (which is just a negative of a cost and functionally equivalent). That makes it difficult to run a search. I’ve come across a whole slew of new papers to read on topics just by changing out key terms for synonyms.

A reviewer may suggest other works to include in your discussion. Sometimes the recommendations are appropriate, other times it’s a backhanded way to fish for citations and the works suggested aren’t actually relevant. I would say harping over not including one is poor form unless it is so similar that is important for you to explain the novel aspect in your paper.

"The literature on this problem is extensive, widely scattered, and not always aware of itself."

Is that quote from something? It's funny. I couldn't find any Google result for it.

an article on Malfatti circles in geometry https://en.wikipedia.org/wiki/Malfatti_circles#History

These are good points but Bengio, Hinton and LeCun do not ignore Schmidhuber's work, they just don't cite it.