First, I'm sorry for your loss and hope that you and your DW find the means to cope with the loss of her father.
I can understand your side of the story, you are forced to change plans for something devastating to your family. I can also understand the campground's side of the story, they are a business that must make a profit to stay open and operational. They reserved a site for you, probably turned other customers away who were seeking a reservation because they "locked in your site". When you cancelled, they still have the site (now with no income) unless they can fill it with other campers. If they refund your payment (which was charged to your card 72 hours prior to your arrival) they do not have an income for that site (unless someone else rents it).
This is the refund policy on the campground website:
"PAYMENT: Camp LeConte requires a 50% deposit at the time of booking.
This deposit is nonrefundable. We will charge your credit or debit card on file with the balance due three days prior to your arrival.
There are no refunds for any reason within three days prior to the reservation day.
This includes, but is not limited to: weather,
family emergencies, mechanical problems and simply a change of plans. Reservations not paid in full three days prior to arrival are subject to cancellation. If the payment method for you balance is different from the information we have on file, we must be notified prior to the balance due date. Reservations changed or cancelled four days or more prior to arrival only forfeit the deposit."
https://www.campleconte.com/map
The policy is clear. It appears that they did "make an appropriate good will gesture" by refunding the charges for days that they did rent the site to someone else. When you think about it, they could easily tell you, "Sorry, nobody rented the site" and they could have kept the entire amount.
It appears that they did go "beyond the published refund policy" and refund the part that they didn't lose by your cancellation.
I'd say that it's simply the way business works in today's competitive market.