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Someone at Intelligent Systems has a ton of influence over these Smash Bros. fighters.  I imagine the discussion went something like this.

Fire Emblem Director: Byleth is the next fighter or I go public with the photos.  You know the ones.

Miyamoto: I will do as you ask.

Later at the Nintendo Board of Directors meeting.

Furukawa: Next item on the agenda is the last Smash Bros fighter.  There really are a lot of great-

Miyamoto: Byleth!

Furukawa: Pardon?  Did you say something Miyamoto-san?

Miyamoto: I said "Byleth".  The next character has definitely got to be Byleth.  I've got a really good feeling about this one.  Did you see those latest Fire Emblem sales numbers?  It's got to be at least our 20th most popular series now.  At this rate it will probably outsell 1-2 Switch.  People are crying out for Byleth!

Furukawa: But Miyamoto-san, perhaps there are already enough Fire Emblem characters in Smash Bros?

Miyamoto: Do you know who I am?  I create the greatest characters of all time in my sleep.  Take out my characters and there wouldn't be a Smash Bros.  Guess what?  I've got a fever and the only prescription is more Byleth!

Kimishima: Miyamoto knows what he is talking about.  I think we should go with Byleth.

Furukawa: How about we put it to a vote?

Everyone votes for Byleth except one.  Furukawa abstains.

Furukawa: *Sigh* Very well.  I'll call Microsoft and let them know we are going a different direction with the last Smash Bros fighter.  Looks like the Master Chief Collection won't be coming to the Switch after all.