The blocks are a compromise on both ends. Both how the player builds and also on caclulation power of the machine you are running on.
If you make blocks into subblocks to allow more ganular building, it becomes also more complicated for players to handle this. I'm still just playing a game, i don't want to end up in CAD or 3D-modelling.
On the performance of hardware side 7d2d is also a heavy lift for CPUs and RAM. Introducing subblocks would increase that by powers. Just by providing it. World data size would explode, not just on disc but also in memory. That further effects streaming the world between disc and ram. If you fly around in god mode you can see how structures pop up when moving fast, that is because loading the next chunks from disc already takes time. If additional subblocks where used it would be even harder to stream fast enough because you then need to transfer a lot more data.
Not mentioned things like structural integrity, collsision detection or shadow casting yet.
This is somehow worked around by having blocks showing various states of degradation. If you hit a block it starts showing cracks. You could also change the model of the block to make a more plastical degradation visible (e.g. like wrenching cars), but it still would only be a set of predefined states, not a visually physically correct representation. Means, it would still just show a generic block, but not show a notch in the tree exactly where your axe hit it.
The performance reason might become solved once if computing power keeps increasing. But atm we are still lightyears away to make such things possible in the way you expect them.
