First of all, congrats on getting a nom! That is a great achievement. I, for one, believe all SAs are outstanding schools and know that, if you end up at USAFA, you will have a wonderful experience.
In terms of what happened . . . Based on what you have stated there are two (related) likely possibilities. The first is that there were 10 candidates interested in USNA who were more qualified than you and thus you got your second choice. The second is that you were among the top 10 but the others weren't interested in USAFA. Because you indicated a desire to attend USAFA, the MOC could give you that nom (thus, in his/her view keeping you happy) and give others ranked lower than you who may not have indicated an interest in USAFA the USNA slots.
The requirement to rank or choose a SA up front with an MOC isn't exactly "fair," but it's quite common in most geographic areas. For those going through the process next year (or still doing interviews this year), the ranking/selection process is more complex and important than some people think.
If you would truly be happy at more than one SA (as KMJG2000 clearly will be), ranking is fine in order of your preference. However, do NOT list/rank a SA that you do not want to attend just to get a nom "somewhere" b/c that's where your nom may be. Also, don't try to "game" the system by putting one SA first (or alone) for one MOC and another first or alone with a second MOC -- again, UNLESS you would really be happy at both.
If you have a preference but are flexible about attending more than one SA, you definitely have more opportunities to pick up a nom and get at least one of your choices -- and, as stated, all SAs are great. If you are committed to one school, be sure to put all of your eggs in one basket.