If you think "multiple word length" would enhance the game, you haven't thought for very long about what makes the game work. It basically has to be 5 letters or the entire structure falls apart.
As for Craigslist, I suspect there's not "a reason". I imagine it's a lot of different, complex reasons.
While I'm not absolute on the notion that 5 letters is perfect, I found the current game lives on quite a precarious balance; There is a Japanese version with around 65 possible letters, and the secret word being 4 letters, but this turns out to be significantly harder, with the game rules adjusted accordingly to allow up to 12 tries. Despite being able to play it in my mother tongue, I found it less fun. Tweaking the formula (even in English) will likely require lot of thought into re-balancing.
5 letters gives enough options without requiring the player to have access to a lot of guesses to have any hope of winning, and gives the game a short playtime.
It's built to be quick to play. You can play it on a commute, or dip in a few times throughout the day.
You wouldn't have that progress visible to players with a larger problem space. Tangentially, you'd also wind up having to lean more on "technical" (as in scoped to a particular domain, not technological) language in order to fill the list. That limits access to those outside of that field of study.
As for Craigslist, I suspect there's not "a reason". I imagine it's a lot of different, complex reasons.