Trying to make sense of a recent situation

[myjourney11]

I wanted to work at a particular company for several years and was thinking to apply at the bottom just to get my foot in the door. The next morning after thinking this, a job posting was revealed in my field - I was thrilled and off my resume went. A few days later I was called with a phone interview, followed by an in-person (we clicked and the interview was a hit), then onto the 3rd interview with the hiring manager. Everyone was amazing - I could feel how much they loved working there! Their energy was spilling into me and making me excited about working with them.

The alignment of the events were effortless and felt that LoA was working for me. I followed up yesterday after one week of my last interview and was told that it went to someone internal but that I made the best impression. I feel they wanted to hire me but the internal candidate had the knowledge of their systems so they went with her.

I'm trying to figure out how did LoA work in my particular situation until a certain point and then come to a hard stop ?