At some level, faculty kids represent a slice of middle class kids just like big donor legacies are a slice of rich. They have to be qualified but if they are, they get the nod. Athletes can also fall into that group if the school truly recruits.
I don’t envy admissions at all because they have a lot of needs to fill – way more than the # of kids in the class – so finding kids who can create the whole has to be really hard. And at many schools, some of the scholarships are restricted as well, so this can tie the hands of the FA office. I know from having worked with gifts at a non-profit that if the donor says "to fund tuition for a student from Georgia " that you can’t decide, without permission, to make it "half tuition for two students from Georgia ".
It’s like a big puzzle. And it’s one of the many reasons kids shouldn’t take admissions decisions too personally