I'll answer this in the context of Melee:
The main problem with Melee was the "WegottagetthisgameoutfortheGCN'slaunchHURRY!", aka. severe time constraints. Bowser and Peach were the obvious two included (they were shown in
E3 2001's presentation), and Mewtwo also got in partly because of that and partly because of the first movie (he was teased in the presentation because the presentation had the already-finished intro movie). The roster for Melee minus the clones was 19 characters (20 if one counts Sheik).
Sakurai directly stated on the
Melee website that Ganondorf was
not initially planned, but his popularity + his model being the same as Falcon made it possible to clone him. From that it could be argued that the 6 clones ('Dorf, Falco, Y. Link, Pichu, Dr. Mario, Roy) were likely decided late in development. Much later than would be permissable now.
So that's... 4 out of those 10 that made it into Melee. And one of them
barely.
We also know from
the Melee website's Q&A section that Wario was next-in-line. Quoting
Source Gaming:
That (excessive number of Mario characters at the time) was also a major roadblock for Toad. And he, alongside Mew, had the problem of more popular characters ahead of them. Sakurai and HAL's intent might've been to include Toad as an NPC and as Peach's counter as a way to still include him in some form or fashion.
And since then, well, Toad's stayed that way. The change to Peach's / Daisy's grab arguably hurts him since - to be blunt - he's reinforced as part of Peach's moveset instead. Time constraints again, perhaps, but still.
He could certainly be a candidate for Smash 6, though. Especially since Toad's a well-known long runner. It's not like Sakurai sees consistency as holy (See Chrom and Robin's Final Smash).