Point 1: SpaceX's entire development philosophy is "test early, test often and learn from failures". This is a much quicker pace than simulating every imaginable failure scenario and leads to faster progress in development. With the Falcon 9, that process proved wildly efficient and successful, culminating in a launch vehicle so reliable that it's cheaper to insure a payload on an F9 that already has multiple launches under its belt than a brand new booster. And they're turning enough of a profit to develop the Starship largely on internal funds, seeing how the early Raptor flight tests were before the HLS contract.
Point 2: Just adding, the Raptor engine is the first full-flow staged combustion engine to ever get off a testing stand and actually fly. The engineering complexity of these things is on the level of the Shuttle's RS-25.
Point 3: SpaceX were the only ones with more than designs and mockups to present, and they had a reliable track history from working with NASA on the commercial resupply and crew projects. And I see no problem with awarding a contract to a bid that actually fits into the budget.
Point 4: Multiple options was always part of the plan. NASA wants redundancy, so that if one of the providers runs into problems, the other provider can continue (and perhaps even take up the slack) instead of everything coming to a grinding halt. For a perfect example, look at the Shuttle and Commercial Crew programs. The Shuttle got grounded and since it was NASA's only manned launcher, they had to bum rides from the russians. In contrast, the CC contract was awarded to Boeing and SpaceX. With Starliner's continued issues, SpaceX has picked up the slack and fulfilled more than their initial contract in launches, instead of NASA having to bum rides from the russians again. The initial HLS contract was supposed to go to two providers, until the budget got cut. Blue's bid was always the favorite for the second pick.