Apparently Renfe uses the term “Confort” to refer to 1st class and “Elige” means you get a standard seat and “Confort” means you get to choose between a standard seat and a first-class seat
This isn't correct. "Elige" is their mid-tier T&C fare, offering more flexibility than the "basic" 2nd class ticket, which has stricter terms and only 2nd class seats. Within Elige one can choose 2nd or 1st class seats, stripped of 1st class amenities, sold as 'Elige' or 'Elige Confort'.
I have no idea why Renfe would sell someone a first class ticket and give them anything other than a first-class seat
They don't. If you buy a First Class, or Preferente, ticket you get a 1st class seat, along with 1st class amenities (mainly lounge access and food&drink included). What they do offer is the option to buy a 1st class seat without getting a 1st Class ticket.
Sure, it's a unique structure, but it isn't particularly difficult. It offers RENFE the flexibility to sell capacity that wouldn't be booked as full-fare 1st class. And it allows them to strip 1st class service completely from trains that won't justify the expense, by offering the upgraded seats at a reasonable premium, without the services and amenities.