First, it is because the Falcon 9 have a good track record. Much of regulation is basically convincing a whole lot of people that we know what we're doing and we're not going to cause a problem for you. By 2020, SpaceX had been fighting through what they perceived to be mostly useless bureaucratic regulations. SpaceX had a pretty good track record of 67 straight success with the Falcon 9 and had done the CRS and COTS program. During those programs they had only one failure, back in 2015, so they started off with a higher level of trust. By contrast, take Starship. Look at how much regulation issues that is facing. I won't go into it here, but you can search up "Why hasn't start gotten an FAA launch license?".
Additionally, one test flight is not exactly what happened here. While Dragon is different, the CRS and COTS program missions were all test flights of a sort. For the launcher, all 84 (85 counting the AMOS-6 on ground failure) missions were tests. The only thing Crew Demo-1 was testing in one flight was the things required for humans.
Finally, one test flight isn't all that crazy either for a reliable launcher:
- Starliner only planned to have one test flight (then the test flight failed).
- The SLS only had one test flight before it will have crew.
- The shuttle had 0 uncrewed test flights (I won't go into why).
- The Titan II GTV (the Gemini vehicle) only had 1 test flight to verify it's safety for crew (the other was solely to test a heat shield)
I could continue, but you get the point. This isn't unheard of.