Tárrega was not only one of the greatest composers for the classical guitar, he was also one of the first great transcribers for the instrument. He knew the guitar thoroughly and he knew how to make the pieces he transcribed shine as majestically on the guitar as they did on the original instruments for which they were written.
In this particular case, Tárrega extracted the main and opening  theme of Beethoven's Pathetic Sonata and composed a short work based on this marvelous melody. He did not go all the way with the transcription because he realized that the rest of the work did not really fit the guitar and it is not even a very interesting work for the piano to start out with. 
The beauty of the opening theme is so grand that the following parts simply do not compare... the listener is compelled to hear more and more of the main theme and Tárrega delivers. I suspect that he must have at least though of making a set of variations for the piece but he came to realize that the melody was simply too perfect to play with....