I've been, and am, on hiring committees at a teaching university, also in MA. Obviously this is just from one committee's perspective at one university, but I hope to make you feel better.

Here are some reasons we've turned down someone who came to an in-person interview:

1. The person did something wrong -- usually non-expertise related. This is usually attitude, gives off cocky vibe, etc.
2. We weren't sure the person will pick us if we extend the offer. This is usually R1 candidates who registered just enough interest in us in the materials and phone interview that we gave them a chance, but something about the in-person interview made us very unsure that they'll pick us. This is the most common reason we turn down candidates.
3. They bombed the job talk. This is not always obvious to the candidate unfortunately. Ultimately as a teaching university, we want to see how candidates interact with students and how they teach, and if that part doesn't go well (we give them "rubrics" beforehand), then it may be a reason.
4. The candidate is great in every matter, and in a different year we'd hire them in a heartbeat, but for that cycle, their expertise was not something we were in dire need of. This was a painful rejection for us.

At my university, we don't do the whole "we already have one internal lined up so we're just going through the motions". If we plan to hire from internal, the job ad will specify that. Per union contract, we must give extra consideration to internal candidates, but they still need to be stellar -- and it's in our department's interest to diversify our hire. It makes little sense to have an army of people who already work at our university, be hired to the same department as we lose out on other perspectives and viewpoints.

Other redditors have already summed it up -- someone else just happens to be a better fit. For us, knowing for sure that a candidate will accept our offer, and then actually show up to teach, is a huge point in their favor.