What happened with Falling Free -- in those days (though not now) the final Nebula ballot was a preferential ballot. The 1988 final ballot had novels on it by, among others, Greg Benford, Orson Scott Card (then still riding high in fannish esteem), William Gibson (then busy creating cyberpunk), and Gene Wolfe. These entries, each of them individually stronger than Falling Free, all had separate passionate voting blocs -- which effectively worked to knock all of them out of the running, leaving the award to go to most people's second (or maybe third or fourth) choice.

Which is why a voting system that works well to produce political consensus doesn't do so well at picking works of literary merit, and SFWA eventually stopped doing it that way.