It would seem to me that those people would be shafted in a way since less qualified candidates are going to NAPS with the guarantee of appointment the following year? What am I missing here?
In my personal opinion (this is not something USNA has ever said), this is a "glitch" in the system. Every year there are some candidates who are too well qualified academically to go to NAPS/Foundation and yet not quite strong enough to get an appointment. Or they're a triple Q'ed candidate who didn't get a nom. It's a numbers game. There are more qualified candidates than there are slots. However, it doesn't make sense to send those kids to NAPS/Foundation b/c they don't need add'l academic prep. They're strong academically but there are too many people stronger than they are.
Assume 2 candidates are basically equivalent in terms of athletics, ECAs and leadership and take the same courses in h.s. Candidate A is ranked 30/200 with a 3.7 GPA and 650/700 SATs. Candidate B is 45/200 with a 3.5 GPA and 600/650 SATs. Both are likely to be triple Q'ed, but A appears to be stronger academically than B. Sending B to NAPS/Foundation isn't necessary b/c B has a strong academic record -- just not as strong as A. And, when there are limited slots for appointment, A may end up getting an appointment and B doesn't.
I realize it may not sound fair but there are lots of things in the college admissions world that aren't fair. For example, if you're a kid from Texas applying to Bucknell (a PA school), I guarantee that you're going to have an easier time than a similarly qualified candidate from PA. And candidates from AK, WY, ND, SD, etc. are highly prized outside those states. Why? Most colleges strive for geographic diversity. Is it fair? It's reality.
Finally, my personal view is that candidates offered NAPS/Foundation have very strong ECAs, athletics, leadership, etc. but I wouldn't say they are necessarily stronger in those areas than the triple Q'ed candidates who don't get in. Some are, some aren't. And '88 (above) is correct in that many kids offered NAPS/Foundation come from backgrounds where they didn't have the same opportunities as other students in terms of the courses they could take, the tutoring/mentoring they could receive, the number of times they could afford to take ACTs/SATs, etc. Don't assume for a minute that USNA offers NAPS/Foundation to students who they believe were lazy and sat on their duffs for four years in high school -- rather, they are candidates that USNA strongly believes have the qualities to achieve academically but have not been given the right or necessary opportunities to do so.