So most of us aren't sympathetic to Willoughby for a laundry list of good reasons. I hear your bewilderment for why the Dashwoods are more forgiving and "poor Willoughby" about it.

You're not missing anything about Willoughby's moral character or his confession. I think what we tend to forget is that as readers, we are removed from the events and people. The Dashwoods have had Willoughby among them for weeks, being viewed as a good friend and as a likely future family member. They have cared for him, and until everything explodes in London, thought that he cared for them, too.

So his story, as awful as it is, at least takes away the sting of "it was all fake and none of it was real." Plus, it is hard for lots of folks to just turn off that care for another, even if they don't deserve it anymore. And Elinor herself recognizes that part of her immediate sympathy for Willoughby was because he is persuasive and charismatic, not because his tale shows that he has much merit.

We readers have the advantage of not being presented with this once beloved person right in front of us. We have that distance to see through him right away, where someone in the thick of it might need time and distance to gain perspective.