Orbit is not about distance, it is about speed (perpendicular to gravity). Starship deliberately did not reach orbital velocity on this flight, so although they are fairly certain it is capable of doing so (esp after testing engine relight on this flight), they have not done it yet. Not being at orbital velocity is one reason why they are not delivering payloads.
The reason for choosing not to go orbital at this point is indeed as another commenter said: safety. A craft which has not reached orbital velocity is therefore traveling on a parabola, which has a predictable flight path. If they lose control of all systems, they can still be confident that it will crash where they want it to (in this case, the Indian Ocean). If instead you boost enough to get orbital and then lose control, it is much harder (almost impossible) to know where the craft will end up.
SpaceX (and the FAA) wants to make sure everything works properly by doing sub-orbital flights, then when they are fairly confident nothing will completely break on them they can start testing in an orbital regime, by powering on Starship's engines long enough to achieve the requisite speed.
They don't need to relight to reach orbit, they just performed SECO a bit early. For reference at 190 km up which Starship reached, it needs to go 28,000 km/h to stay in orbit. Today it was flying at 26,000 km/h.
