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I feel like it’s a red flag they did not bring that up in the beginning of the interview process. Relocating is not a small thing. Usually a company would want to know up front if you are able to relocate before proceeding with the interview process.
Chief
Tell them it wasn’t what was discussed. Period.
Pro
Seems vague and confusing tbh.
Can you ask them to clarify the reason more? Also if people you talk to are remote and geographically spread they may be grandfathered in to the allowance. Companies may have other preferences for newer employees.
Sounds like they’re not going to let you work remote…
1. Do you have any leverage?
2. Do you need this job?
If the answer to #2 is yes, then then the answer to #1 is no.
If you already have a job and don’t “need” this one, I’d ride it out further until you have an offer in hand, then approach the remote situation. You can always walk away.