Smash *should* be best played with an arcade stick or solid d-pad, but Nintendo keeps forcing people to use analog, so the 8-way gate from the Gamecube design is the best analog choice. That's about what it comes down to.
I, uhh... What? Should it? Why?
There are so many techs that rely on specific stick movement, and can you imagine trying to recover accurately with Fox being able to go only in 8 directions and nothing in between?
In any case, you can change controls in more recent Smash (more recent than melee) so D-pad is movement, though I admit the D-pad tends to be in a slightly uncomfortable place compared to L-stick