It's either a bug or they are dumbasses because there is no provision to cast Mage Armor at a higher level spell slot in the PHB.
Unlike some editions, 5e has no such prohibition. From the PHB:
CASTING A SPELL AT A HIGHER LEVEL
When a spellcaster casts a spell using a slot that is of a
higher level than the spell, the spell assumes the higher
level for that casting. For instance, if Umara casts magic
missile using one of her 2nd-level slots, that magic
missile is 2nd level. Effectively, the spell expands to fill
the slot it is put into.
Some spells, such as magic missile and cure wounds,
have more powerful effects when cast at a higher level,
as detailed in a spell's description.
That's in general, yes, but if you look at the entry for Mage Armor, there is no provision for casting it using a 2nd level or higher slot. Let me illustrate what I mean:
Lightning Bolt
3rd-level evocation
Casting time: 1 action
Range: Self (100-foot line)
Components: V, S, M (a bit of fur and a rod of amber, crystal, or glass)
Duration: Instantaneous
A stroke of lightning forming a line 100 feet long and 5 feet wide blasts out from you in a direction you choose. Each creature in the line must make a Dexterity saving throw. A creature takes 8d6 lightning damage on a failed save, or half as much damage on a successful one.
The lightning ignites flammable objects in the area that aren’t being worn or carried.
At Higher Levels. When you cast this spell using a spell slot of 4th level or higher, the damage increases by 1d6 for each slot level above 3rd.
That's the entry for Lightning Bolt in the SRD wiki. Compare that to the one for Mage Armor:
Mage Armor
Conjuration (Creation) [Force]
Level: Sor/Wiz 1
Components: V, S, F
Casting time: 1 standard action
Range: Touch
Target: Creature touched
Duration: 1 hour/level (D)
Saving Throw: Will negates (harmless)
Spell Resistance: No
An invisible but tangible field of force surrounds the subject of a mage armor spell, providing a +4 armor bonus to AC.
Unlike mundane armor, mage armor entails no armor check penalty, arcane spell failure chance, or speed reduction. Since mage armor is made of force, incorporeal creatures can’t bypass it the way they do normal armor.
Focus: A piece of cured leather.
See how there is no line for effects using a higher level spell slot? That is what I was referring to. I suppose the general rule you cited allows it but nobody in their right mind would ever do it because there is no benefit to it.
Did you read the spoiler?
I'll emphasis it
CASTING A SPELL AT A HIGHER LEVEL
When a spellcaster casts a spell using a slot that is of a
higher level than the spell, the spell assumes the higher
level for that casting. For instance, if Umara casts magic
missile using one of her 2nd-level slots, that magic
missile is 2nd level. Effectively, the spell expands to fill
the slot it is put into.
Some spells, such as magic missile and cure wounds,
have more powerful effects when cast at a higher level,
as detailed in a spell's description.Here is a line from the paragraph before this header:
When a character casts a spell, he or she expends
a slot of that spell's level or higher, effectively "filling"
a slot with the spell. You can think of a spell slot as a
groove of a certain size-small for a 1st-level slot, larger
for a spell of higher level. A 1st-level spell fits into a slot
of any size, but a 9th-level spell fits only in a 9th-level
slot.
If you've been playing 5e so that only spells that explicitly have such provisos can be cast at higher-levels, that is incorrect.
The reason for doing so is because you have no smaller spell slots available. also to get past a potential counter spell
