Masahiro Sakurai stated that Super Smash Bros was designed to be from the very first entry in the series, a celebration of Nintendo's video game history. Non-video game characters are therefore not allowed. But there may be reasons that support Masahiro Sakurai's decision. Reasons related to lore, that is.
You may think Sailor Moon cannot join Smash due to the possibility of a panty shot overdose, but that is not the real reason. The real reason is that Sailor Moon has to face villains so ghastly they're worse than the biggest, baddest villains Nintendo has to offer. What's more, Sailor Moon was revealed to be Princess Serenity, which explains why she does not want to engage in mortal combat against her enemies. Then there's Sakura Kinomoto's magical girl escapades. It turns out that this was because of the dark events of Tsubasa Reservoir Chronicle chapter 200, where Fei Wong Reed's death seal devoured Princess Sakura, resulting in a series of events leading to Clow Reed having to split into two personalities. There are even claims that Akiho from Cardcaptor Sakura's Clear Card Arc has something to do with Clone Sakura. With all that said, Nintendo decided that Lip the Flower Fairy from Panel de Pon should only be a Mii Swordfighter costume in Super Smash Bros Ultimate, and Lip was the closest Nintendo has to a proper magical girl.
At the end of the day, magical girl lore is clearly not compatible with everything Super Smash Bros is all about. Therefore, we should respect Masahiro Sakurai's policies that disallow non-video game characters from taking part in Super Smash Bros. Even Sony's PlayStation All-Stars Battle Royale do not allow non-video game characters from taking part in the PlayStation-themed dueling tournament, possibly for the same lore-related reasons. At the end of the day, if licensing issues was not the reason, then it has to be the lore that poses a big problem, because lore plays a huge part in every major franchise, and if the lore is too ghastly, then it is definitely not allowed in dueling tournaments.