Spinning reel drag came loose - freak accident?

I almost cast into a tree, but yanked back quick at the last second, and when I did, my line got tangled around the base of my spool. I untangled it and started to reel in the slack and realized I had a fish on, but somehow my drag was now backed all the way out to the point that the drag knob was almost ready to fall off.

I think I might have turned the reel handle a few times before I realized the line was wrapped around the base of the spool, and that somehow backed out the drag, but I’m not sure. I’ve never had anything like that happen before and I can't wrap my head around the mechanics of how the drag would back out.