My mother in law - who is European but living in Asia - has her 2-year ESTA expiring soon. She can travel to the US but is there a way for her to extend/renew her ESTA once she is here?

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Why not apply for a new ESTA online? Should take a second.

Also AFAIK the ESTA just decides whether you can enter the country, not how long you can stay. That length of stay I think it’s 90 days for most cases.

If she wants to be longer than 90 days she needs to exit and renter, or apply for a tourist visa with longer duration

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ESTA only allows for a 90 day period of stay in the United States. This cannot be extended under any circumstances. There is no mechanism for it under the law. B-1 or B-2 visitor status can be extended once here, but you have to enter with a B1/B2 visa.

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You can apply for satisfactory departure via CBP to extend for 30 days if you have an exigent circumstance. Last year these requests were generally approved by USCBP, not sure about now.

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