USB ext4 drive not recognized, why?

Officially the supported formats are what is listed in that WD Support Knowledgebase link.

Unofficially there might be ways of modifying the My Cloud OS, depending on what My Cloud model you are using, to support additional formats. Primarily this may be done by using a different OS on certain My Cloud models. See the following discussion that some have successfully implemented (often after much work) to run different OS’s on their single bay or certain multi bay My Cloud models.

The main issue with the single bay My Cloud models is the modified firmware that WD created as the OS. You cannot do an apt-get to install modules on them as they typically brick the device. One can try building their own modules or modifying the existing ones by compiling their own OS using the GPL firmware WD makes available on the WD Support page for each My Cloud model. But again it takes time, effort and above all knowledge to successfully do so.

There are no issues using rsync to copy data to or from a My Cloud device to another NAS other than the need to generally have to do it via SSH. I’ve done it between a Synology NAS and a first gen single bay My Cloud. Its once again an unofficial method, not one endorsed or supported by WD with respect to single bay My Cloud models.