Eli5: Why do you use “they” for non-gendered speech instead of “it”?

Question

I’m not a native speaker, but as far as I understood, for singular objects and animals “it” was used. Why use “they” for individual people then?

In: 1400

Answer 1

They = one or a group of people

It = an inanimate object

IMO using “IT” dehumanizes someone.

I don’t use IT with animals either.