Smash was developed as a fighting game for first party Nintendo characters. Nintendo only has so many famous icons, after that you're left with more obscure Nintendo characters like Ness and Captain Falcon. And that's fine, Nintendo can reach into the bottom of their catalog for first-party fighters because it's a Nintendo fighting game. If Nintendo only put their incredibly famous characters in Smash, the roster would be tiny and that's just not fun to play. Not to mention Nintendo has explicitly added in unknown characters into Smash to help boost the popularity of that specific franchise, just look at Xenoblade and Fire Emblem.

Third party characters are different, however. Sakurai has repeatedly said that a third party character has to be from a historic franchise and have a history on Nintendo platforms at some point to get into Smash Bros. All the third party characters thus far has met this requirement with flying colors; they're all from historic, critically acclaimed franchises that have shaped gaming.

Indie characters do not meet this requirement in any fashion by their very nature. Shove Knight is from a one-off indie game released in 2014. The game is great and was fairly popular for an indie game, but he's still not in the same league as every single other third party fighter in terms of relevance and historical value. Street Fighter kickstarted the fighting game genre, Metal Gear revolutionized the use of story and cinematics in video games. Shovel Knight was a pretty good platformer. The series has no prestige.

While they may be good characters with potential for a good moveset, characters like Shantae and Shovel Knight don't deserve a spot on the Smash roster. Their series don't have the prestige and historical significant compared to every single other third party inclusion.