It's exactly because they hadn't demonstrated engine relight in space yet. That means they couldn't guarantee they would be able to deorbit Starship in a controlled way. An uncontrolled deorbit would be bad because it could come down literally anywhere and large chunks would hit the ground.
Because they couldn't guarantee precise deorbiting, they never put it in orbit to begin with. Starship was on a ballistic trajectory that falls back to Earth. Any payloads they deployed would fall back too, unless they carried their own rockets to reach orbit themselves.
> Starship was on a ballistic trajectory that falls back to Earth
Actually Starship on this flight wasn't quite on a ballistic trajectory, the periapsis was actually above the ground so it counts as an orbital trajectory. Without the atmosphere it would keep going.
Because they couldn't guarantee precise deorbiting, they never put it in orbit to begin with. Starship was on a ballistic trajectory that falls back to Earth. Any payloads they deployed would fall back too, unless they carried their own rockets to reach orbit themselves.