Why is dung and straw better pasteurized than sterilized?

There are several reasons for this.
Dung and straw are used as so called bulk substrates. This means you are usually working with a greater quantity of those substrates and inoculate it with grain spawn.
Now, while it's easy to sterilize a bunch of PF-Tek or grain jars in the pressure cooker, it's a much more difficult task to do so with 20 or more pounds of straw or dung. Who has such a big pressure cooker anyway?  :)

The second, probably more important reason is the contamination risk of sterilized substrates.

When you pasteurize substrates at 160-170?F (71-77?C) some beneficial micro organisms, mainly bacteria, stay alive, inhabit the substrate, and guard it against other more aggressive micro organisms. Thus, mushroom mycelium is still able to grow on these substrates.

This is the reason why you can inoculate bulk substrates with spawn in open spaces without taking special sterile precautions.
However, if you sterilize the bulk substrate  it becomes just as susceptible to contaminants as grain spawn.
This would mean that you would have to inoculate the bulk substrate in a sterile environment, i.e. in a clean room under a  HEPA filter. This is not practicable if you have big amounts of the substrate.

The above is only true for pure dung and straw, the only allowed additives are cocco coir, vermiculite, gypsum, and calcium carbonate (for Hydration, pH correction, and aeration).
If you supplement your bulk substrate with additives high in nutrients such as spent coffee grounds, brown rice flour, or wheat bran it must then be sterilized and inoculated in sterile conditions.