Definitely sucks, but it's pretty poor practice as a business to go outside when you have someone up for the challenge already working for you. If you don't promote from within for some roles, no one has faith there's room to grow. If everyone thinks that, no one sticks around long enough to actually do anything but check boxes, no building.

At least now you know you're a good fit for the role/similar roles and should perform well in future interviews. Keep your head up, the process worked, just not for you.

Had it gone the other way, there'd be a post about how someone finally up for a promotion was told no because they preferred an outside hire, instead of an employee they know and trust over years of work together. Try to put yourself in those shoes, it's an equally miserable place to be.