Why does an incorrect password on iPad lead to a complete reinstall?

Set a passcode on iPhone – Apple Support (AU)

Erase data after 10 failed passcodes

Set iPhone to erase all information, media, and personal settings after 10 consecutive failed passcode attempts.

1. Go to Settings , then do one of the following:

• • On an iPhone with Face ID: Tap Face ID & Passcode.
  • On an iPhone with a Home button: Tap Touch ID & Passcode.

1. Scroll to the bottom and turn on Erase Data.

After all data is erased, you must restore your device from a backup. If you didn’t back up your iPhone, you need to set it up again as new.

You are clearly using a stand-alone iPad. Unmanaged devices will be automatically disabled if you enter the incorrect device Passcode too many times - this being a fundamental protective measure designed to (a) protect a User's data from unauthorised access, and (b) ensures that a stolen device is of no use to anyone else.

If an incorrect Passcode is entered too many times, by design the iPad will automatically erase the iPad's Security Chip (i.e., the Secure Enclave) and the device will be disabled. In this condition, you have no alternative other than to restore the device using a Windows PC or Mac computer.

Centrally managed devices, such as those used in Educational or Business/Enterprise environments, have a greater range of options for resetting devices. Managed devices are usually managed by the associated IT Team using two principal software tools - these being Apple Business Manager (ABM) and a Mobile Device Management (MDM) platform.

ABM is a free tool offered by Apple - and may be adequate in its own right for small businesses. MDM platforms are "paid" commercial software tools.

Sign up for Apple Business Manager - Apple Support

https://www.apple.com/business/docs/site/Apple_Business_Manager_Getting_Started_Guide.pdf