Why do renovation quotes vary so much between contractors?

Because they are rarely quoting the same work. The gaps are almost always in what is excluded: permits, demolition and disposal, subfloor repair, electrical brought up to current code, painting, and the final clean. Put the three quotes side by side and mark which of those each one actually names. A quote materially below the others is usually not cheaper labour, it is a shorter scope, and the difference reappears as change orders once the walls are open.