The SOD Awards were an extension/evolution of their "Soapy" awards, which were done via ballots included in the magazine. Though the televised Soap Opera Digest Awards were no longer voted on directly by fans/readers, there was always the feeling that the winners were more than just favorite actors/shows of the magazine's editors, since those who won the trophies tended to be covered more (and more favorably) by SOD than perhaps they deserved. It is a "one hand washes the other" type of situation where a show will benefit from SOD's frequent articles/chatter, while SOD benefits from the fans of that show buying more copies of the magazine. So while a show like Ryan's Hope might have been an objectively better soap (for example), they were never going to sweep the SOD Awards the way they might have swept the Daytime Emmys because RH did not offer its actors for interviews in the magazine as often, and RH fans didn't buy enough magazines to merit lots of positive coverage in the magazine. In short, the SOD Awards were never about objective quality the way the Daytime Emmys attempt to be, and not even on par with the People's Choice Awards as a popularity contest (as their Soapys had been). The SOD Awards were simply the editors of SOD rewarding certain shows, performers, and PR firms for helping them sell magazines over the course of the previous year.
SOD had more access to Knots's actors and producers for interviews/features/spoilers than the other three nighttime soaps, and that translated into SOD treating KL as their "favorite" soap, regardless of other factors. Which is not to say they did not deserve recognition---KL did have a well-deserved reputation for producing a superior product. In daytime, a different situation occurred with Days of our Lives, which got much more ink in their magazine than the higher-rated Y&R, AMC, and GH....and that cozy relationship reflected in their outsized representation in the SOD Awards. The old joke was that SOD stood for "Salem Overdose," with Salem as the fictitious town where DOOL is set. The favoritism of the SOD editors toward the shows that "played ball" with them became so pronounced that a competing publication, Soap Opera Weekly, sprang up with the mission statement to cover all the soaps equally and was very popular for a decade or so. Of course as soap viewership declined the soap press also declined, leading to the closure of most soap magazines other than SOD, though it is a shell of its former self. Events like the Soap Opera Awards also fell by the wayside, as even the Daytime Emmys faded into obscurity and lost its cache as a primetime event.