Why is it better in drag racing? I would have thought less wheel spin in an IRS?
Live axles are much easier to manufacture in different sizes and take more abuse than CV shafts. It's also much easier to modify and change the rear track and put your own mounting points on the axle tubes. There's also a few ways to centre it - watts, panhard, triangulation etc.... Basically you can make the diff fit the car instead of having to make the car fit the diff like you would with an IRS cradle. They also don't go around corners which is why it's not really that important that each wheel moves independently. Then there's them constantly keeping a 90 degree angle to the pavement like Immortality said.
The squat can be good and bad depending on how the angles of all your arms are setup, but yeah, if the car is slammed and no changes have been made to compensate, the amount of camber that will be introduced is usually detrimental. Other side of the coin is that squat puts weight on and digs the rear tyres into the ground.
Motive did a good video about removing anti-squat from Nissan subframes by moving arm pickup points down slightly. I believe the Traction Mod from MCA for 86s/BRZs is also similar to this. From about 8:00 onwards.