Ambrose Spellman was punished because he was involved in a serious conspiracy to blow up the Vatican. This grave act led to a severe magical sentence, binding him to specific limits.
Ambrose's punishment resulted in his being placed in bondage, which confined him to the Spellman property limits. At the start of Chilling Adventures of Sabrina, he had already served an extensive 75 years of this sentence. He personally explained the reason for his long-term confinement to a warlock named Luke, whom he met on their first date, detailing his involvement in the plot targeting the Vatican.