It's not ridiculous. To earn (Olympic) ranking points at some competiton, you must obtain MER at that same competition, otherwise you will get 0 points even if you won. Therefore, everyone who qualified for the Olympics must have had their MERs in order (at least partly).
Specifically, after the 2019 season, this left only India and South Africa without full MERs, since they scored their points only in CCI4*-S competitions, but not CCI4*-L.
But then the postponement came and FEI asked everyone to re-confirm their CCI4*-S MER in either 2020 or 2021.
Usman Khan is a specific scenario. He had his MER on another horse which died suddenly. He then got a new horse with whom he had to start from scratch (this includes MERs at CCI2* and CCI3*, without which starting at CCI4* events is not even allowed).
So it's not neither shocking not unfair. Wildly inconsistent dressage scores, slow cross-country... Those are all symptoms of an ungelled partnership. It was to be expected, really.