>Why does “as if the waters had but newly retired” mean there’s a lot of water (and thus mud)? “As much mud as” clued me in, but I don’t get this part.

"Imagine everything here was flooded and then the water leaves. The land would be left super muddy right? That's how much mud there is now".

I'm surprised it's a difficult phrase, I'm not even a native speaker.

The part with the stegosaurus is harder in that it relies on a biblical reference, but there is no way for it to be interpreted by a decent reader as a literal animal, it should at most make you wonder why he's suddenly bringing up that idea ("it would not be wonderful...).