How?

For the how part, they were attacked by a much stronger force of far superior quality that enjoyed complete air superiority. To compound problems further the British gravely underestimated the fighting ability of the Japanese and left only three batalions on the Gin Drinkers line. There was just no way that a garrison of ~14000 men consisting of mostly fresh colonial troops could possibly hold out for very long against a battle hardend Japanese army of 29000 combat troops.

Why?

The why part is a little more complicated and takes us into geo-politics and specifically the balance of power in the Pacific region. So there are basically five major players around the table here we need to keep some kind of tabs on.

Great Britain - Until the signing of the Anglo-Japanese alliance Britain had largely pursued a foreign policy of non-intervention since the Concert of Europe often called Glorious Isolation. The idea was basically that Britain should avoid permanent alliances with other major powers that risked dragging Britain into continental wars. I won't get into the pros and cons of it but by the end of the 19th century it was becoming clear that while the Splendid Isolation left Britain free of obligations, it also left it without friends or allies in a world where grand alliances were once again forming.

The USA - For most of the 19th century the US had followed some form of non-interventionalist policy, perhaps most famously the Monroe Doctrine. However, with the Spanish-American War and the Philippine-American War the USA too was abandoning its isolationist policies.

Russia - Imperial Russia had pursued a policy of imperialist expansion in the east for centuries. Above all else it sought a warm water seaport in the East. The main eastern port of the Russian Empire was Vladivostok but it was not reliably open during the winter months. When Russia intervened in the Boxer Rebellion it effectively occupied Manchuria, after the war Russia held onto Manchuria in defiance of the Boxer Protocol. This was a cause of great concern for both Japan and Britain who had tradtionally been one of the counterweights to Russian expansion in Asia.

Japan - The Empire of Japan had been on the rise as a major power in the Pacific since roughly the Meiji restoration. While it had centralized the government, adopted many western aspects within its military and industry it was not, nor did it attempt to be, a western nation. Imperial Japan was very much looking towards overseas expansion in the wake of the Meiji restoration and did not look kindly on the Russian occupation of Manchuria. This would eventually lead to the Russo-Japanese war.

China - While large and populous, China under the Qing dynasty was politically unstable and in many ways backwards, however, the sheer size of China always made it a force to be reconned with, at least regionally.

So, come the turn of the century a few key things have happened. Russia has remained in Manchuria after the Boxer rebellion, Japan has won the First Sino-Japanese war convincingly, proving to both itself and the other powers of the region that the Japanese army and navy are a competent force to rival any in the region. France, Russia and Germany have signed the Triple Intervention, forcing Japan to return the Liaodong peninsula but, Britain, while invited, did not sign it.

We now have a situation where Britain is abandoning the Spendid Isolation and looking for allies while it is fighting the Boer War, Russia is holding Manchuria in defiance of the Boxer protocol and Japan is looking to expand further in the wake of its success in the First Sino Japanese war. The Anglo-Japanese alliance is formed. To Japan, it is a guarantee against foreign intervention by France or Germany in anticipation of its coming war with Russia, to Britain it is a safeguard for its East Asian holdings since Britain is now allied to Japan with its strong Pacific Navy.

The Anglo-Japanese alliance would hold for 20 years which allowed Japan to kick Russia out of Manchuria and further strengthen its position in mainland Asia. This is relevant because in the years leading up to WW1 and over the course of the entire war, Japan was an ally to Britain. Despite Japanese victories against the Chinese and Russians, Britain still considered Japan something of a second rate army since they had, until this point, mostly fought the Chinese and Russians.

So, Britain did not really consider Japan a threat to its colonial possesions in Asia until well after ww1 and did not really start to consider the possibility of a Japanese invasion of Hong Kong until the Japanese conquest of Canton. Suddenly Hong Kong was surrounded by Japan. At this point, Britain did not consider Hong Kong defensible. It did not have the Naval power to contend with the Japanese and without that, Hong Kong was always doomed even with the Gin Drinkers Line reinforced the analysis was that Hong Kong could at best delay the Japanese to buy time for Britain elsewhere. Because of this view Hong Kong was relatively lightly defended until 1941.

The garrison of Hong Kong was strengthend in 1941, in part to act as a deterent to a Japanese invasion but also to show British commitment to its Asian holdings, particularly to the Chinese. However, the garrison was still mostly fresh troops from Canada and the British Raj, it was not nearly strong enough to withstand a full scale invasion and fell much quicker than the British (or the Japanese) had anticipated. You have to view this in light of the global situation in 1940/1941. It was not as if Britain had an abundance of troops available since the war in Europe and Africa was not going particularly well at this point.

TL;DR - Britain never really heavily fortified Hong Kong because Japan was an ally of Britain until ~ early 1930's and it was hard pressed for troops for other theaters of the war since Britain was effectively the only major power still standing against the Axis in 1940/1941 until the US and Soviet entries into the war.