Kind of nutty to me how Nintendo was suddenly going all-out on creating new IPs during the Gamecube/GBA era, yet Brawl was more focused on adding characters who probably seemed like notable omissions from Melee.
Had it gone with more of a 'Smash 4-style' of selecting characters, Brawl probably would have been filled with folks like (for example) Kururin, Isaac, Andy, Ray MK III, Starfy, Mona, Chibi-Robo, Saki Amemiya, Barbara the Bat, Alexandra Roivas, Jonathan Raimi, and/or maybe even someone from Odama or something.
We really don't know exactly what garners a new character from a new IP aside from the notably successful ones and even then, some aren't always guaranteed, especially if looking at Sakurai's words about how Fire Emblem Awakening almost didn't get in because of timing, despite Awakening being the most successful game of the franchise at the time. And in the case of ARMS and Xenoblade 2 for Ultimate, they did miss out until DLC.
Basically, it's not just a matter of popularity, but also timing too. And then you look at Sakurai's words about Shulk where he was a rare occasion as he came from a franchise that had not proven itself yet, which brings the question on how character deciding in regards to lesser IPs works and how did Xenoblade manage to slip through compared to something like Golden Sun or Rhythm Heaven(although in the latter's case, there's more to why that possibly didn't happen).
Heck, even though Sakurai didn't add in Takamaru due to him not being well-known enough outside of Japan, his words implied that he still gave Takamaru a lot of thought, which makes you wonder on if he did choose Takamaru, who might have missed out if he did get in.
At the least, there are the three cases where it wasn't a case of not enough popularity, sales or timing, but the system's limitations, which come into play in regards to these characters:
- Dixie Kong, who was originally planned to be with Diddy Kong before technical limitations got in the way of the idea
- Rex, who was originally the playable character while Pyra & Mythra behaved like their Xenoblade 2 counterparts before limitations kept that from happening and Sakurai went with Pyra & Mythra as a Partner changer
- And the Chorus Kids. While the Chorus Kids themselves have not been discussed yet by Sakurai yet, with the only mention of them being from the early Gematsu leak which mentions the Kids and Chrom(who was originally planned as mentioned by Sakurai before Sakurai could not find a way to make him interesting from Marth and Ike and then choosing Robin instead), the only speculation we have on them was that they were developed for a bit(including the Rhythm Heaven icon that was found in the datamine of Smash 4), but then like what happened to the Ice Climbers, the 3DS limitations ultimately got in the way.
All in all, aside from the characters that Sakurai has openly talked about, it's only speculation on why some characters or franchises seem to have more luck than others. Though I think Sakurai does have a good idea that there are a lot of characters people do want to see, hence some of the Assist Trophies(like Isaac, Krystal and Shovel Knight), Mii Costumes(like Isaac, Saki, Skull Kid, Ray MKIII, Lip, Sans, Dante, Dragonborn and Shantae. Also Lloyd, but his costume was in the last game) and even Friend Icons(the only non-Assist trophy non-playable franchises to get icons are Rhythm Heaven/The Chorus Kids, Shantae and Panel de Pon/Lip, aside from Diskun and Dr. Kawashima from Brain Age).
Edit: Thinking about it now in regards to the characters lost to technical limitations, I'm legitimately curious on what Sakurai might be able to do with the Switch 2. Like I'm curious what
advanced character he might come up with that could only happen because of the Switch 2.