Surprisingly, this hasn't been my experience this year. But I know of several people who have performed at what I think many would consider "Honors" level who were skipped over for the designation. I myself dealt with it once on my very first rotation, for which they even state up front "We only handed out one Honors last year, and we never do it during the first half of the year, because let's be honest, a medical student in the beginning of their third year can't possibly be functioning anywhere near what one could consider 'Honors' level".
I got an "A" in that rotation, and was told I was as close to "Honors" as could be. All the glowing praise in the world, however, is pretty pointless when they still thumb their nose at you like that.
I honestly don't think I'd even care if I hadn't been planning all along to do an extremely competitive field, and am just now starting to consider an even more competitive specialty. There are a few other people I know of (who have been all-stars on rotations and done very well on shelves but still did not receive Honors) applying to things like Derm/Plastics/Ortho/Rads/RadOnc who are surely going to be going "up against" people from other schools who pan-honored M3. That kinda stinks, I guess.