Input protection for instrumentation amplifier
But wouldn't a positive (or negative) transient direct a large current to +VS (or −VS) and damage the power supply?

Yes and that's why there needs to be a clamp (sometimes called &quot;crowbar&quot;) circuit between the supply rails (so between +Vs and -Vs). Such a circuit can be voltage triggered or edge triggered (ESD events are fast pulses). When triggered such a clamp shorts the supply rails so that the voltage beween +Vs and -Vs is limited.

Should't they have decoupling capacitors to direct these transients to ground instead of going through +VS or −VS?

Yes and those decoupling capacitors will definitely help but when the IC isn't soldered in a circuit yet, there are (almost) no decoupling capacitors. On a chip only small capacitors can be made (100 pF is already a lot) and that's by far not enough for proper ESD protection.

Do the internal input resistors reduce the input impedance?

No, they only slightly increase it, actually by so little that it does not matter.
Your assumption that the input impedance is 400 ohm + \$r_{\pi}\$ would only be correct IF the emitters of Q1 and Q2 were grounded, which they are not.
From the drawn circuit you can only guess the differential input impedance which will be roughly (sucking thumb, too lazy to do proper calculation) \$\beta * R_G\$.

If so, the 400Ω would be pointless...

Then those 400 ohm resistors would not be there now would they. They do serve a purpose, they limit the current when the the diodes D2, D3, D4 conduct. Without the 400 ohm resistors, the full ESD event voltage would be on the base of Q1 and Q2 destroying them immediately. The same applies for an overvoltage situation. D2, D3, D4 can only protect as long as the current through them is limited and that's what the 400 ohm resistors take care of.

But the book states 22.5V.

The book states &quot;22.5 V above each supply&quot; which seems excessive, this is indeed probably a typo.