Why doesn't the depletion zone cover the entire diode?
Your first pictures show only the 'free moving' things: both parts are electrically neutral: they contain an amount of kernels (with a lot of layer-layer electrons) that compensate the free moving parts. The electrostatic force forces the free moving thingies and their kernels together. (But the kernels can't move, so its the free moving thingies that are more or less bound to their location.)

But in the boundary layer the free moving thingies have to move only a very small distance to annul each other, so that is what happens: a small region where the attraction of the freem moving thingies overcome them being attracted to their 'homes'.

These homes can't move, so the missing free moving thingies leave a small region on each side of the boundary that is charged and is lacking any free moving thingies (hence: an isolator).

"Why do they stop diffusing"? Because they are attracted ('bound') by the atom kernels they originated from.