It is true that a lot of characters' relevance waned and, had a new Smash title been developed at any other time, they almost definitely would've missed the boat and would not be on the roster to this day. However, simply being in Smash also gives a major boost to that character. I mean, just look at Roy coming back in Smash4. A clone, a clone whom (as far as I'm aware) was played with less than his base character, and who wasn't even that well-loved among fans of his home series. In a sense, it was no surprise that he was deemed expendable in Brawl (even if attempts were made otherwise), and yet he was still a popular pick to return simply due to his veteran status. And despite their vocal haters, I'm sure even someone like Corrin has their significant share of fans (either for the character itself, for their gameplay, or both). What's even more amusing is that a lot of these characters no doubt gained even more fans due to how well-balanced Ultimate is as a whole.
I mean, yeah, they get more popularity and visibility from having been in Smash before. For sure. But that has nothing to do with their relevance/importance to their own series or to the history of Nintendo gaming in general; thus, it is usually not enough to make them worth rostering IMO.
Like, Young Link's importance to Nintendo or to Zelda doesn't derive from him being playable in Smash; no, that comes from what he does in his own games. And there are plenty of interesting Zelda characters arguably just as or more important than him that warrant consideration (ignore for the purpose of example that YL can be made a clone while these others might not be able to be clones). If you think YL is better to roster than these alternatives based on his importance to LoZ or to Nintendo at large, then okay, roster him. We can have the debate about whether or not he is more important than someone like Impa who could also conceivably be made as a clone, or someone like Skull Kid who might or might not represent Majora's Mask better and may or may not be more popular but may also cost more resources. As I said, it's a debate we can have. But YL being thrown into Melee as a roster-pad clone twenty years ago shouldn't be a factor. Nor should Impa missing the boat twenty years ago be a factor if she is deemed important and practically workable enough right now.
Sometimes the popularity gained from Smash can lead to a character getting more attention within their own series or among Nintendo fans in general, but this only happens to varying degrees. I hate to keep hammering on the Incineroar example, but Incineroar is still way less popular/relevant within his own series by now compared to several other alternatives from Gens 2, 3, or 5 who apparently missed the boat solely due to timing (or even ones from Gens 1,4,etc. who got passed over for bigger names of their time like Charizard, Lucario, etc.). And this is despite his appearance in Smash. Similar things can be said of Jigglypuff, in case you think I'm just hating on newgen mons. Even Roy is outdone by other Fire Emblem characters in terms of popularity among FE fans (like Lyn), and no amount of Smash appearances or popularity (from Smash fans or FE fans) can change the fact that outside of minor appearances in spinoffs, he is a one-off character from a Japan-only game that didn't even garner that much attention in its time, certainly much less than those of other FE characters that are not represented (like Lyn, Hector, Celica, Ephraim, Tiki, Anna, etc. take your pick). Of course, once again Roy can be a clone so the comparisons are not one-for-one; this is just to illustrate. But to sum up, sure Roy is popular now due to Smash, but he's still not that important to Smash or to FE or to Nintendo in the grand scheme of things, and he should still have to compete for a roster spot against other characters in a similar place like Falco or Wolf or other possible FE clones or Impa or Dark Pit or whoever else you can cook up (no need to make comparisons solely between characters of the same series; those examples just came to mind first).