Preface: I have no knowledge of this situation whatsoever.
Could it be possible Steph was asked to be part of the squad with the caveats, you likely won't play and you will not be captain and she said "No. I won't do that."
Being a good influence in the dressing room is all well and good but some players will still want to play. And I don't know Steph, as I'm sure most possibly all of us here don't, but I got the feeling being captain was a big deal to her. A very big deal.
A few years ago the FA or the Lionesses did a series of videos with the players. In one, the women were asked to impersonate other women on the team. Every one of them, if my memory serves, when asked to do Steph was like "Hello. I'm the Captain," and captain this and captain that. They made it seem obvious being captain was extremely important to her. That is how it appeared from their impersonations. Come to think of it, whilst they had many of the big names at the time in the videos, I do not recall seeing "Captain Fantastic" taking part.
Edit: Now that i have thought about it, she was in some of the promotional videos.