H4 Extension filed after I-94 expiry date, denied. H1B is Valid

USCIS has denied H4 visa extension for my dependents although my H1B is valid until March 2023.

Timeline:
H4 Extension filed on 02 Jun 2020 along with H1B extension for the Primary applicant
H4 I-94 expired on 10 Jul 2020
Biometrics completed for H4 extension in Aug
H1B extension approved in Jul 2020 with validity till Mar 2023 (I-140 approved already)
H4 extension denied on 30th Apr 2021

It’s already 300 days since H4 I-94 expired. Is there any way to appeal this decision?
How long can my dependents stay in the US legally without getting banned for 3yrs for overstay?

Is there a reason given why H4 Extension is rejected?. Usually H4 Extensions are approved as long as Primary applicant H1 is approved.