Plot hole... of logic

This isn't really the legitimate answer that you're looking for, but what you're talking (writing) about is a similar thing to what we're doing when we breed dogs and cats for weird looks and configurations, just to make a cute, or conveniently small and docile pet. And a lot of it is downright cruel, like with Persian cats, which have many health problems and discomforts from their distorted features.

E.T. is like the pug dog he's modeled after, a contrivance of pet-breeding.

As for back on E.T.'s planet, it is possible that ungainly animals can survive in some environments, like sloths in South America, because there were no predators until carnivores invaded from North America several million years ago.
http://en.wikipedia.org/wiki/Great_American_Interchange

Most alien designs aren't too practical anyway. It's all just for show, not well thought out functionality.

Spielberg has said that E.T. was a plant, but I don't buy that, even if it is all fiction. E.T. was structurally an animal, with a heart, and he ate and drank Earth consumables. "Plants" don't walk around, they stay "planted".

An animal is basically a tube that moves around and passes food through itself. Eyes, ears, brains and limbs are additional things those tubes evolved to help them move around and find and secure food to pass through themselves. And that's basically what E.T. was. You can't just up and say he's a plant.
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The story is king.

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A simple answer is that ET's species evolved to became physically slow and clumsy after they became technologically advanced. Their weapons protected them from any predators.

Short, slow, clumsy, long, spindly arms with long, unweidly fingers. How did a race like that survive?

This is what we call "over thinking it". ;-)