I would generally agree, but the manager is right that many people leave the sign out by accident and then get upset that their room didn't get cleaned. (And many then want an afterhours housekeeper to clean it or provide fresh towels.)

IMO, housekeeping should not assume that a guest has extended the stay. Instead, housekeeping should check with the front desk first. Because once you finally check out at 4pm, housekeeping still should remake the bed and replace the towels.

DND sign or not, it's NEVER a good plan to leave your computer unattended in plain view in your room.

What we may not want to know is did they use fresh sheets when they made up the bed anticipating that you were staying another night?