You are correct. The bill excludes those who applied and who were rejected. We don't have any way to know what the reason for the rejection was, but the concern is that the bill has a differential impact in addressing some of these lost Canadians and not others. Those who applied had to demonstrate a connection to Canada, whereas the bill automatically remedies others who never applied and who may have a limited connection but nevertheless lost their citizenship automatically.
On March 20th, 2023. See this statement in context.