I wondered the same thing.
Hispanic used to mean people from the Iberian Peninsula, but now it has been stretched to anyone speaking Spanish.
Same for Latino, so why do they use both?
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The distinction used to be, as you say, hispanic meant European, Iberian derivation. Latino or Ladino referred to South and Central American Spanish speakers, inclusive of mestizos. It is all hopelessly muddled together now.
I think “Ladino” was used only for mestizos, not for ethnic Spaniards or Indians. It’s a bad word choice anyway because it’s also the name of the language of the Sephardic Jews who were expelled from Spain and moved to North Africa and eventually around the world (including the American South and some places in Latin America).
Another (perhaps obvious) distinction is that “Hispanic” is an English word and “Latino” is a Spanish one. In this country we used to call people from Latin American countries (or at least the whiter people, as opposed to Indians) “Latins,” but that phrase could also refer to Italians like Rudolph Valentino. I believe that it was during the Nixon administration that the government began classifying people as “Hispanic,” which of course really popularized the term.