I often come across people that are skinny fat. They are slim but have a high percentage of body fat. This happens because of lack of resistance training combined with poor nutrition and it simply happens with age. The average male loses 6lbs of muscle between the ages 30-50 because of a hormonal decline, that's a whole bicep and tricep. Each pound of fat takes up 18% more space than each pound of muscle with the average male putting on 1lbs of fat every year after the age of 30 so you can see how this ends up with less muscle and more fat.
What typically happens is people start cardiovascular work (running) which is catabolic to the muscle, meaning you lose even more muscle. They may burn fat in the short term but over time and when their body starts to adapt to the stimuli they will start a slow fat gain again now this time with even less muscle and have a harder time losing the fat. Another bad scenario is that they go on a very low calorie restricted diet or a low protein vegetarian diet that again breaks down too much muscle tissue.
The 2 critical moves for these people are; 1. To start resistance training to build muscle and 2. a high protein diet with plenty of good fats to build your hormones.