I think we are short of money and can’t be dishing out long term contracts. I’d say they are repaying loyalty and not looking for longer contracts elsewhere.
I think a lot depends on the players belief in their ability to play at a higher level, and what the manager and owners believe
If I didn't have enough belief to hold my own at a higher level, I would be looking for as long a contract as possible because, in the event of promotion, I probably wouldn't get a game and I would be compensated if released. Conversely if I believed in myself then I would be looking for 1 year contract (in order to be free for a move to a Championship club), unless I was confident of promotion and a regular start
From the owners' viewpoint, if they think the player would not feature in the event of promotion then they would not be willing to grant a long term contract but, if they did think the player was Championship standard, they would be looking for a long term contract so that, in the event of promotion, they have a good player already signed up. If promotion didn't come, they would get a pay-out if a Championship club came calling
There is that feeling of belonging and wanting to play for a club until they retire. In that situation a long term contract would be ideal and a 1 year contract a bit demotivating
Hope that made some sense