Maybe that's a sign of dysfunction. People like to rail against ad supported companies, why wouldn't we feel the same way here?

Because it's a small price to pay for being able to send mail across the country for 55 cents. If most of the funding for the USPS came from people buying stamps to send out birthday and christmas cards, they'd either have to jack up the price considerably, or they wouldn't stop by your house 6 days a week to see if you have anything to send.

Maybe if those wasteful practices cost what they should less people would do them. Christmas cards are about as impersonal as facebook happy birthday wishes. Daily mail pickup is another thing that is a total waste. I've probably put outgoing mail in my mailbox 50 times in the 20 years I've lived in this house. 99% of what I receive would be better served electronically, but shockingly some companies still don't offer paperless bills.

I think I’d be fine with a reduce role.

Also, you can make the same argument w.r.t to Facebook, google, ad networks, etc. you just pay for the ability to send email from gmail for free ️

I think it is more about it being new or ideologically convenient and the ad support is a convenient excuse. They don't rail against TV or radio and they are also ad supported.