There are not many worse losses for a top HW in their prime than Joshua losing to Ruiz

Lewis Vs Rahman has got to be up there and Tyson Vs Douglas surely people forget how close the Ruiz and Parker fight was if it was anywhere other than New Zealand Ruiz would be a former champ before the Joshua fight more than Rahman and Douglas could say

 

Frazier jr by Tyson

 

That fight was comical to watch.

Many people saw Joshua as an ATG heavyweight before that fight, but there he was getting beaten up by a short fat tattooed guy.

 

It was supposed to be his big coming out party to the US. A country that looks down on anything non-American that certainly didn't need any encouragement to be sceptical of a European fighter. Yet they bought in to the hype and filled out an arena, celebs and all. AJ had conquered the UK, now he was going global.
It was also an opportunity to the grease the wheels for a Wilder unification bout. If he created a fanbase over in the US and looked good doing it then sooner or later the US media would've taken the gloves off and started asking team Wilder some serious questions as to why this fight wasn't happening. It would also strengthen his (already solid) bargaining position.
These were the only reasons that Hearn even signed Jarell Miller in the first place. He was a chip to be cashed when the inevitable next stage of global domination was to come in to fruition. His failed drugs test is one of the all time great sliding doors moments in boxing history.
A loss would've been bad but losing to a late replacement that no-one had heard of (and one that resembled a Teletubby) was unthinkable. To get battered as well just about ended any hopes of a US takeover before he'd even got started. It irreparably damaged his brand for some in the UK too.
This is before you even get to the psychological damage it did to him as a fighter and the way it has come to define (rightly or wrongly) his legacy. The entire escapade was calamitous - a total catastrophe. It couldn't have gone any worse.

 

I think with it being his US debut, Wilder KO'ing Breazele in the first round a few weeks earlier and Fury being back in the picture, he felt pressured to make a statement, and he probably overlooked Ruiz as being an actual threat in the process. After he got the knockdown he was so eager to end the night that he got in too close and basically made it a firefight with a guy who has a better chin and faster hands than him, and he paid for it.