Each state's legislature decides that, so naturally states will differ on deadlines for when mail can arrive. Also, the count dragging on is because counting hasn't finished on the sheer quantity of mail-in ballots received before election day, not after (which are insignificant in number).

Because states have the right to choose their voting process as long as it complies with the 14th Amendment, and the process has worked for them as long as it has.

There's plenty of time between Election Day and when the votes actually have to be in, and it's actually unusual for all the votes to have been counted entirely by the end of Election Day even in a normal year from what I recall.

The votes aren't due for another little while anyway. So who cares whether Election Day is postmarked-by day or received-by day?

"It's election day" doesn't mean what you seem to think it means. Absentee and other mail ballots have always been allowed to arrive late in the majority of states. There just aren't normally enough of them to make the difference in a close race like this one.

When I lived in California, it was common for military ballots to arrive up to two weeks after Election Day. That never mattered for the presidential race, but other races weren't officially records until everything was counted.