It's a common misconception that embassies are sovereign territory. They're not. They're just property owned by foreign governments that's protected by international treaties and conventions.
For example, we expelled all those Russian spies after the Skripal murder. But we undoubtedly
knew who they were already - and tolerated them. Because we have a bunch of spies in our embassy in Moscow. It's convenient to maintain the fiction that they're all diplomats.
What Ecuador did was to abuse that hospitality by granting Assange asylum, mostly in an attempt to look anti-American for voters at home. Which probably pissed the FCO off far more than the spying that all embassies normally do. In short, they took the piss. I think that's why we've given them so little help I finding a way to back down but save face.