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.

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.

How did you get this resolved?