Is List<Dog> a subclass of List<Animal>? Why are Java generics not implicitly polymorphic?

No, a List<Dog> is not a List<Animal>. Consider what you can do with a List<Animal> - you can add any animal to it... including a cat. Now, can you logically add a cat to a litter of puppies? Absolutely not.

// Illegal code - because otherwise life would be Bad
List<Dog> dogs = new ArrayList<Dog>(); // ArrayList implements List
List<Animal> animals = dogs; // Awooga awooga
animals.add(new Cat());
Dog dog = dogs.get(0); // This should be safe, right?

Suddenly you have a very confused cat.

Now, you can't add a Cat to a List<? extends Animal> because you don't know it's a List<Cat>. You can retrieve a value and know that it will be an Animal, but you can't add arbitrary animals. The reverse is true for List<? super Animal> - in that case you can add an Animal to it safely, but you don't know anything about what might be retrieved from it, because it could be a List<Object>.

What you are looking for is called covariant type parameters. This means that if one type of object can be substituted for another in a method (for instance, Animal can be replaced with Dog), the same applies to expressions using those objects (so List<Animal> could be replaced with List<Dog>). The problem is that covariance is not safe for mutable lists in general. Suppose you have a List<Dog>, and it is being used as a List<Animal>. What happens when you try to add a Cat to this List<Animal> which is really a List<Dog>? Automatically allowing type parameters to be covariant breaks the type system.

It would be useful to add syntax to allow type parameters to be specified as covariant, which avoids the ? extends Foo in method declarations, but that does add additional complexity.

The reason a List<Dog> is not a List<Animal>, is that, for example, you can insert a Cat into a List<Animal>, but not into a List<Dog>... you can use wildcards to make generics more extensible where possible; for example, reading from a List<Dog> is the similar to reading from a List<Animal> -- but not writing.

The Generics in the Java Language and the Section on Generics from the Java Tutorials have a very good, in-depth explanation as to why some things are or are not polymorphic or permitted with generics.