Then she revealed that she'd entered them in for the same competition and one had been commended. Yup, Story 2, the one we hadn't liked so much. Which shows that...
a) there's no accounting for taste
b) it's all opinion
A story entered for a competition has to get through the initial reading stages. The initial readers may not be writers themselves, they may not even read that much. I suspect this means that in the initial rounds there is a preference for
a) what is perceived as "literary" writing
b) the initial readers don't recognise that easy-to-read writing is actually very hard to write
c) humour is undervalued compared to 'serious' topics - the short list for Wells was surely disproportionally full of death and depression.
So, if you write humour, should you give up entering short story competitions? No, because the humorous short story usually stands out as wonderful relief in a sea of heavy writing. When I was entering competitions I noticed that the 2nd or 3rd prize often went to a comical piece.
I think the only conclusion you can draw is that entering competitions is a lottery because there's no accounting for opinions.