If all things are absolutely equal other than Salary, the company only needs one person, and Bob will take the offer for $50K less--then, yes, they'll probably hire Bob. By virtue of having an expensive lifestyle--and, presumably, more local options--Sally has priced herself out of remote work for companies that genuinely don't care where employees are located.

Of course, real life is more complicated than that and all things are rarely equal.

ADDED: GitLab actually explicitly states: "All things being equal, we will hire people in lower cost markets vs. higher cost markets."