What does this mean? What are we doing wrong?
Would assume, that the authentication did not succeed.
a) the buildscript repositories and dependencies for the project level build.gradle:
buildscript {
    repositories {
        google()
        jcenter()
    }
    dependencies {
        
        // Android Gradle Plugin
        classpath "com.android.tools.build:gradle:3.3.2"
        // Google Services Plugin
        classpath "com.google.gms:google-services:4.2.0"
    }
}
b) the dependencies for the module level app/build.gradle (the Android Intel x86 images may still have a previous version of the Google Play Services installed, eg. 10.2.0 runs on the current x86 emulator, while eg. 11.8.0 runs on my physical ARM device). referencing play-services and firebase-core will include all of their modules, unless excluding some them. update: one has to reference all the libraries individually now. referencing com.google.android.gms:play‐services and com.google.firebase:firebase-core does not work anymore since 15.0.0.
android {
    ...
    buildTypes {
        debug {
            // suffixing the package name for debug builds,
            // in order to partially mute the crash-reporting
            // is an *optional* configuration (see below):
            applicationIdSuffix ".debug"
        }
    }
}
dependencies {
    // Google Play Services
    // https://developers.google.com/android/guides/releases
    implementation "com.google.android.gms:play-services-base:15.0.1"
    implementation "com.google.android.gms:play-services-auth:16.0.0"
    implementation "com.google.android.gms:play-services-identity:15.0.1"
    // Google Firebase
    // https://firebase.google.com/support/release-notes/android
    implementation "com.google.firebase:firebase-core:16.0.1"
    implementation "com.google.firebase:firebase-auth:16.0.3"
    implementation "com.google.firebase:firebase-config:16.0.0"
    implementation "com.google.firebase:firebase-storage:16.0.1"
    implementation "com.google.firebase:firebase-database:16.0.1"
    implementation "com.google.firebase:firebase-messaging:17.3.0"
    implementation "com.google.firebase:firebase-appindexing:16.0.1"
    implementation "com.google.firebase:firebase-functions:16.1.0"
    implementation "com.google.firebase:firebase-invites:16.0.1"
    // implementation "com.google.firebase:firebase-crash:16.0.1"
    implementation "com.google.firebase:firebase-ads:15.0.1"
    implementation "com.google.firebase:firebase-firestore:17.0.4"
    implementation "com.google.firebase:firebase-perf:16.0.0"
    // the inapp messaging may cause dependency conflicts: 
    // implementation "com.google.firebase:firebase-inappmessaging:17.0.0"
    // implementation "com.google.firebase:firebase-inappmessaging-display:17.0.0"
}
c) the bottom line of mobile/build.gradle should be:
// apply the Google Services Plugin
apply plugin: "com.google.gms.google-services"
d) make sure to have the (downloaded) credentials available at app/google-services.json; on the Firebase Console, one has to add both SHA1 (or SHA256) hashes, of the debug and the release keys, in order to have both builds authenticating properly; once it all matches, it should report:
I/FirebaseInitProvider: FirebaseApp initialization successful
It's all well documented, just see Setup Google Play Services, Firebase Quickstart or Crash Reporting; while I find this article on the Firebase Blog quite useful: Organizing your Firebase-enabled Android app builds, because it explains how to partially mute the crash-reporting. The release notes always announce the updates & changes.