Limiting character selection to 3 or so characters is/was a bit of a tradition for the OTL back when it was active. And once the Online Character Rankings picked up speed the purpose of limiting characters was even more appealing.
There's also something to be said of the quantity of Online Tournaments available at one time. Unlike offline tournaments where there are limitations on the time allotted for tournaments to take place in certain venues, and the players have real-life agendas to adhere to, online tournaments are only as limited to however long it takes for someone to finish a match, whether they want to or not. And, unlike offline tournaments which are scattered everywhere at once, a player can participate in any online tournament they want to as long as they sign up on time. As a result, multiple online tournaments can be set up all at once. However, if every single one of those tournaments were designed the same - standard ruleset, all characters, same stages - what benefit would it give a player to sign up for one tournament, when they could just later for another one with the same rules to come up where they can possibly obtain an easier bracket and win?
Online tournaments have the benefit of liberal manipulations on their rulesets like "mid tier only" or "banned stages only" because so many tournaments can be set up for a condensed group of players to play at once. In order to look appealing to a particular group and and get players to sign up for this tournament alone above all the rest, unorthodox rules like "mid tier only, 3 characters each" are implemented.