I don't recollect all the details (read the article nearly 15 years ago) but 16:9 is NOT considered arbitrary. It is based on an idealized notion of the field of vision when viewing a scene--either on stage, on screen or as a static image. The goal was to bring TVs into a shape that would allow for showing wider ratios without too much compromise (a 2.35:1 image on a 4:3 screen creates quite large bars top and bottom) while allowing for 4:3 image to have side bars that are not too large either. It is also very close to the most common widescreen film ratio in use (more common when the TVs were initially designed than today, but still very common)--1.85:1 (Super 35MM).
Many 1.85:1 films are released on disc as 1.78:1 and the difference is negligible (many TVs have a locked overscan that eliminates the tiny bars of a 1.85:1 on a 1.78:1 screen). However, with 2:1 and higher, zooming or cropping is a noticeable downgrade over leaving the bars in place.
This webpage does an excellent job of illustrating the differences (21:9 is about 2.35:1) of different aspect ratios. You can play around to check different setups (also compare different size screens, if so inclined).
That is very likely owing to your device and not Netflix. I have several different devices with Netflix interfaces and they vary in capability. Same applies to sound--some Netflix devices are limited to stereo and others go to Dolby Digital Plus 5.1 (and perhaps more, but that's the upper end of my devices).