The random password generator is complex. First keep in mind that the password must conform to the user's password policy. Use the admin -> user debug screen to see the effective password policy for the user. No matter the seedlist, the password must conform to that policy.
Second, the seedlist as a concept is a bad idea left over from an earlier era. I don't recommend it's use. The idea is that you would use an actual language dictionary wordlist (not a password wordlist like your using). The seedlist would have a word like a 'horse' in it, and the generator would mutate it slightly to make a memorable password but one that was slightly modified so it wouldn't be in the wordlist.
If you look at the contents of the wordlist your using (the wordlist-giant.zip) the vast majority of the words it it are going to be seeming random gibberish because they are from password cracks, not an an english or other language dictionary.
The idea of using known values or slightly mutated known values for a password is a really bad idea from a contemporary security perspective, and thus having completely random values not sourced from a seedlist is a much much better approach. The seedlist feature is only there for legacy reasons and should be considered deprecated, and is in fact removed from the yet unreleased post v2 codebase. I'll make it a point to update the help in v2.x to make it clear this is a deprecated feature.
Note: If you watch the TRACE level log messages you can get a bit more perspective on how the random generator is working.