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It seems like every firm I look at, average annual associate hours worked is lower than the minimum hours requirement (for the firms that have hours requirements). What gives/what does this mean?

Either the numbers are fabricated, or they're skewed low by people who leave partway through the year/are on parental leave/etc. Probably a combination of the two factors.

I wonder if they count stub years in that calculation.

That calculation is literally one of the worst indicators to work off of. If you want a genuine sense of hours, you need to look at the hours of associates in that practice group at that firm. This can be done by asking about average hours, etc. during a follow-up after receiving a callback. And this is a fine question to ask, though I might frame it less pointedly.

My theory is that firms include the hours billed by stub years in the numerator to skew the average downward.