One situation that came up recently in a thing I read was where iirc the aunt would have looked perfectly suitable, and was even originally approved, but the actual parent had a history of endangerment (which is why the kids were removed) and when the kids were placed with the aunt, she consistently left them unsupervised with their mother. Which would be hard to avoid when their mother is your beloved sister who wants them back! But the mother was still doing things like leaving a two-year-old alone for entire days while out looking for drugs. So they ended up having to disqualify the sister too. That was one where I went in thinking the foster agency was clearly wrong and ending like "well, maybe they did have a justifiable reason". All decisions about removing kids are going to be fucked up one way or another.

I think that's often an issue in cases like this - an abusive parent really, really shouldn't have any unsupervised contact with the kids at all until whatever inspired the removal is handled, and foster parents who have a connection to the parent won't enforce that. I'm not sure how that would apply in a case where the parents were both in jail, but I suppose something similar could have come up (i.e., "fine, stable, nice" doesn't rule out aunt's husband having child abuse priors or something. Of course it could also be aunt's husband having marijuana possession priors.)