They also know they can get brownie points from the rest of the world by looking sane and reasonable vs Trump and his batshit insanity. Everyone knows that Trump is almost solely responsible for this escalation, first with unilaterally pulling out of the Iran nuclear deal and then randomly calling for that airstrike. Plus the Iranians know that a direct war with the US would be disastrous for them.
All-out war means the destruction of their regime no question about it and any regime’s main strategic goal is survival. So what we get is a lot of huff and puff to pretend to their citizens that the regime is strong and to be feared whilst doing nothing to instigate a response that they know results in their end.
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