This game has some really strange design choices.
Why is the last hitbox of multihits so disjointed?
Why do the non-final hits of most multihit moves have absurd knockback? (See: Ally killing 6WX at 0% with the first hit of up-b)
For your first question, there's a couple of (potential) reasons.
1) Dramatic flair!
small hit, small hit, small hit, explosive finishing hit!!
2) That's the hit that sends the opponent flying, so to help make sure it connects the hitbox is increased a bit.
3) I've read several times that in Brawl it was possible to SDI out of a lot (all?) of multihit moves. Perhaps this is another countermeasure against that?
For your second question, I believe it has to do with the physics of keeping any opponent trapped in a fast-moving multihit move. Each of the little hits have to launch the opponent back into where the attacker will be when the next little hit in the sequence goes off. In order to do this those little hits need insane knockback values to keep up. Normally this isn't an issue because the overtuned hits lead into the final hit, which has standard damage/knockback properties that overrides the previous trajectory. What happens in the above clip is an edge case where things don't line up correctly and the opponent broke sequence with tragic results. As for why things didn't line up correctly... I can't be 100% sure. It might have had to do with how one tiny part of the opponent's hurtbox was moving so that it was glanced by the first hit but then when the next hit went off the opponent's "I just got hit" animation hurtbox wasn't out far enough... throw in some Z-axis shenanigans from both sides.... gah, I just don't know.
Oh, and if the Ally/6WX moment is the one I'm thinking of, that's something different. They were both within arm's reach of the top blastzone when Mario up-b'd, and the first hit was enough to put Sonic over it. The difference is that, were they both lower, Sonic would have been carried/trapped as normal. And since only the first hit connected Sonic only had .3% or so on him which wasn't enough to trigger the display to show 1% yet. If I'm thinking of something else let me know and I'll remove this paragraph.
I can't believe there are people who complain about Mii Brawler "Jank" while something like this exists. (And this is just one of many examples)
If this was able to be pulled off with
any level of consistency there would be a
lot more complaining.
As of now it's 100% accidental. But yeah, nobody ever mentions how Brawler "Jank" leaves a non-heavy character with a much shorter recovery move....
-PoptartLord
Edit: It seems like there are some specific situations where it can be done more reliably as outlined in others' posts below. By "100% accidental" I was referring to throwing out something like Screw Attack for damage and it unintentionally sequence broke for the kill.