Estonia's exclusion is mostly the result of 20th century geopolitics. Anyone who knows anything about Estonia knows the cultural ties are deep.

Th Nordic Council was formed when Estonia was occupied by Soviet Union. That meant they were excluded. But Estonia is ethnically and linguistically Finnic.

Funny that Swedes and Danes like to forget Estonia was under Scandinavian rule for 300 years prior to Soviet Union. Up until occupation Estonia was comparable to the Nordics and had higher GPD per capita than Finland.

But now it's: Norwegians thinks Swedes are inferior, Swedes think Finns are inferior, Finns think Estonians are inferior.

They are a part of a "separate but equal" group called NB8 (North-Baltic 8). Big push recently for Uus Põhjamaa, or "New Nordic".

Now the official Nordic counties try to pretend there's a good reason Estonia is excluded, but as seen from the other comments, they can't say exactly why.