if the item is damaged or not as described by the seller I don't understand why the buyer is not refunded the full amount paid, including shipping and handling costs.
Because people lie.
Buyers are not perfect either, and some twits will damage items deliberately to get a refund. Some will say there is damage when the real reason is buyer's remorse.
Requiring the return of the item at the buyer's expense is a way of controlling these nasty types.
Also, in cases where PP gets involved, PP cannot and will not refund money they never touched. So they will refund the original payment, which they handled, but not the return shipping which is out of their control.
From time to time, we do hear of eBay/PP sending an unhappy buyer a USPS shipping label. I'm not sure if this also happens in Canada.
You have 60 days to leave feedback. The most effective feedback is calm and factual. At the same time you will be asked to leave Detailed Seller Ratings. The normal Rating is 5 stars. The lowest Rating is ONE STAR. No stars is a free pass.
If a seller's DSRs drop below 4.3, his ability to list is restricted, the number and value of items he can list is restricted, his fees may rise, and he may be removed from the site.
None of which gets your money back, of course.