Here's the answer you're looking for. There was a time when "ethnic" literally referred to someone's ethnic background -- not his/her race. For example, a white person's ethnicity could be described as Irish, Italian, Polish, English, German, Russian, etc. Nowadays, things have changed a bit, though. For whatever reason, some people prefer not to use the term race anymore when referring to POC: so, they use the word "ethnic" in place of that.
As for what you said about Latinos, you're correct. Problem is, in the US and other regions, all Spanish-speaking individuals are sort of lumped together as one race when, in fact, most Hispanics (e.g., those residing in Latin America) are an amalgamation of races. For instance, you can have a white Argentinian of wholly European descent; you can have a Mexican of mixed European and indigenous (American Indian) roots; you can have a Panamanian of West African descent. There are even persons of Asian descent in Peru. Alberto Fujimori, a former Peruvian president, is of Japanese descent.
In short, I suppose you could say that many folks are ignorant on the subject. You'll even hear some refer to Gal Gadot as a POC on occasion. lol