In Melee there people that end up as local kings that don't do well in nationals. There are also people that are exceptionally good on a national level but simply don't travel (aka "Hidden Bosses").
Nintendo is very hands-off with Melee so tournament organization remains in the hands of the community. There is no single major overseer of Melee tournaments. Anyone can hold a tournament and throw the bracket onto Challonge or Smash.gg. I imagine if ELO was implemented as part of seeding, people would start gaming the system.
> The way seeding gets done is that players get placed into broad tiers, and then those tiers are then fed into pools, attempting to avoid region conflicts or repeat matches from recent tournaments.
This is where the human-in-the-loop part of seeding shines. Mid-tier players are entering national tournaments for the experience. They will not win, and their reg fee is essentially donating money to the winner's pot. But what they gain from the experience is tournament matches with players that they are not familiar with. Many of them will only get two games in-bracket, so it's a huge waste for them if they end up playing against buddies from their own region.
The community actively polices good seeding. There is often an outcry if say too many Nor Cal players get shoved on the same side of a bracket.