Why is receiver RSSI so much lower than the output power of a transmitter?
Strictly speaking, the RSSI reported by an 802.11 interface is in arbitrary units. There is no requirement that it be in \$dBm\$ or anything else; the only requirement is that stronger signals are bigger.

But let's just say that your RSSI is indicating received power in \$dBm\$. It will necessarily be much less than the AP's transmitter power for two reasons:


An intelligent AP will not transmit at full power unless necessary, to reduce interference with adjacent APs.
Most of the electrical energy radiated by the transmitter goes uselessly into space, where the receiver isn't.


Point #2 is essentially the inverse square law. If the transmitter emits 1W, than that means for any sphere centered on that antenna, then there is 1J of energy passing through that entire sphere each second. Neglecting things that might absorb or reflect that energy, this is true no matter how big the sphere is. But since the sphere has an increasing area as it gets bigger, the energy available in a given area is smaller. Dividing the transmitter power by the sphere area gives you the power available per unit of area at some distance \$r\$:

$$ \frac{P}{4 \pi r^2} $$

So say 1W transmitter, 10m away, the field strength (assuming an isotropic antenna) would be:

$$ \frac{1W}{4 \pi (10m)^2} \approx 796\mu W / m^2 $$

Given that your typical antenna in these systems is a lot smaller1 than \$1m^2\$, you'd expect to receive a lot less than even \$796\mu W\$, or \$-1dBm\$, even though \$1W\$, or \$30dBm\$ was transmitted.

Of course, this is just an approximation. Earth will reflect some of the power. Walls will absorb some of it. The efficiency of the power coupling between antennas depends on their relative orientation and polarization. No antenna is isotropic. But the basic truth still holds: most of the energy went off uselessly into space, simply because there wasn't an antenna around to receive it.

1: really what we care about here is the antenna aperture, which is related to the physical size of the antenna but is also influenced by other aspects of its design. For an example of an antenna with an aperture much larger than it's physical size, see the loopstick antenna. Still, that's a rather special case, and your typical wi-fi antenna is still going to have an aperture smaller than \$1m^2\$.