Why does Garmin only use steps to calculate daily active calories even though I perform about two physical activities each day?

Garmin actually does use HR for calculating the Calories burned. For the correct calculation you need to enter your age, gender, weight, height, and you must not forget to also properly select the Activity Class in User Settings. And then, you need to wear the watch 24/hrs a day, so that it can monitor your average resting HR over a longer period - that's an important condition. If you wear the watch for the exercise only, the average minimal HR is far too high, in consequence the difference between the resting HR and the elevated HR during exercise is too low, and therefore also the Calories will be low.

Thank you for the explanation but I narrowed down the issue. I confirmed the calories are logged correctly in the activity but it does not get included in the daily active calories. But if I manually add an activity or sync from another app then Garmin will include the recorded activity calories into the active. This indicates there is an issue affecting how Garmin is seeing the activity calories taken fresh from my watch.

I also confirmed that the calculation was working fine a few days ago and I did not make any major changes to my settings. 

The issue is just annoying because Garmin makes me think that I didn't do much today in terms of active calories when in fact I have substantial calories burned with proof from the activities logged. 

Can you post some specific data, preferably with screenshot of concerned activity pages, as well as the Calories page? So far, I did not see any wrong calculation on my side, or in the data posted by other members here on te forum. 

When looking at the Calories burned during an activity, you must not forget that there is always the RMR (Resting Metabolic Rate) part in it. In other words Activity Calories = timeInHrs * RMR/24 + Active Calories. Which means that the total number of Calories burned during an Activity never goes entirely into your Daily Active Calories total value. The RMR part is always deduced from it. 

Thank you trux for helping me look into this.

It is currently 835 AM on Saturday and I will surely test the issue and post screenshots. But I wonder if the issue is just an anomaly since it only happened yesterday. 

I am glad you referenced the Activity Calories calculation because I think it can explain the issue.

I will post more data later.