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When I did complete the DAY 1 "main quest" all the little side missions I had picked up along the way -finding out about the children playing doctor & such- just disappeared from my missions. I was able to complete one (helping a lady bury a body), but all the others vanished. I can't seem to pick them up again either. Is that the way it is set up? You need to do "Main Mission" and "All Side Missions You Can Fit" within the allotted time period?
Yep. The quests of the previous day will disappear in the morning. The 'deadline' is midnight for Day 1, but for other days you'll have time until 6 or 7 a.m.
Also a small tip: try to visit the Theater every night. It's not essential, but will help get more insight on things that are happening in the game.
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Also -yet unrelated to the thread title- are there any materials you can pick up along the way? I checked manically during the beginning in the first few houses I visited, but I didn't find anything to interact with -apart from a microscope I could not get to function. But I read someone say that they "scavenge" for most of what they need. Should I continue investigating every nook and cranny of every house for items that can be picked up, or is that in reference to corpse looting?
No, it's not necessary to explore every house (though you can find some food or other things in the desks and cupboards). Dumpsters, on the other hand, are quite useful, and you can check them a few times a day. The junk you find inside (needles, hooks, empty bottles etc.), you can swap with passers-by for some useful things. For example, you can fill bottles with water (at the big barrels on wheels) and give them to drunkards for bandages. Children will give you ammo and medicine for hooks and needles and some other stuff.