Webpack throws error for a file in node_modules - reactjs

Question

When I try to run Webpack, it throws an error:
Module parse failed: Unexpected character '#' (1:0)
You may need an appropriate loader to handle this file type, currently no loaders are configured to process this file. See https://webpack.js.org/concepts#loaders
> #charset "UTF-8";
| .k-theme-test-class,
| .k-common-test-class {
# ./src/App.js 19:0-52
# ./src/index.js
# multi #babel/polyfill ./src/index.js
At first I thought the issue is the # symbol and then I realized it is not supposed to even run through node_modules, right?
My webpack.config.js is:
const path = require('path');
const HtmlWebpackPlugin = require('html-webpack-plugin');
const MiniCssExtractPlugin = require('mini-css-extract-plugin');
// const PrettierPlugin = require('prettier-webpack-plugin');
const ESLintPlugin = require('eslint-webpack-plugin');
module.exports = {
entry: ['#babel/polyfill', './src/index.js'],
output: {
path: path.resolve(__dirname, 'dist'),
filename: 'bundle.js',
chunkFilename: '[id].js',
publicPath: '/',
},
devServer: {
historyApiFallback: true,
},
resolve: {
extensions: ['.js', '.jsx'],
},
module: {
rules: [
{
test: /\.js$/,
use: ['babel-loader'],
exclude: /node_modules/,
},
{
test: /\.s?css$/,
exclude: /node_modules/,
oneOf: [
{
test: /\.module\.s?css$/,
exclude: /node_modules/,
use: [
{ loader: 'style-loader' },
{
loader: 'css-loader',
options: {
modules: {
localIdentName: '[name]__[local]___[hash:base64:5]',
},
sourceMap: true,
},
},
{ loader: 'sass-loader' },
{
loader: 'postcss-loader',
options: {
postcssOptions: {
plugins: [['autoprefixer', {}]],
},
},
},
],
},
{
exclude: /node_modules/,
use: [MiniCssExtractPlugin.loader, 'css-loader', 'sass-loader'],
},
],
},
{
test: /\.(jpe?g|png|gif|woff|woff2|eot|ttf|svg)(\?[a-z0-9=.]+)?$/,
loader: 'url-loader?limit=10000&name=img/[name].[ext]',
},
],
},
plugins: [
new HtmlWebpackPlugin({
template: path.join(__dirname, '/src/index.html'),
filename: 'index.html',
inject: 'body',
}),
new ESLintPlugin(),
new MiniCssExtractPlugin(),
// new PrettierPlugin({
// configFile: '.prettierrc',
// }),
],
};
If I remove the 3 css-related exclude: I get the following error:
ERROR in ./node_modules/#progress/kendo-theme-default/dist/all.css
Module build failed (from ./node_modules/mini-css-extract-plugin/dist/loader.js):
ModuleBuildError: Module build failed (from ./node_modules/sass-loader/dist/cjs.js):
SassError: Internal Error: Incompatible units: 'px' and 'em'.
at C:\www\Svila\SvilaReact\svila-erp\node_modules\webpack\lib\NormalModule.js:316:20
at C:\www\Svila\SvilaReact\svila-erp\node_modules\loader-runner\lib\LoaderRunner.js:367:11
at C:\www\Svila\SvilaReact\svila-erp\node_modules\loader-runner\lib\LoaderRunner.js:233:18
at context.callback (C:\www\Svila\SvilaReact\svila-erp\node_modules\loader-runner\lib\LoaderRunner.js:111:13)
at Object.callback (C:\www\Svila\SvilaReact\svila-erp\node_modules\sass-loader\dist\index.js:62:7)
at Object.done [as callback] (C:\www\Svila\SvilaReact\svila-erp\node_modules\neo-async\async.js:8069:18)
at options.error (C:\www\Svila\SvilaReact\svila-erp\node_modules\node-sass\lib\index.js:293:32)
# ./src/App.js 19:0-52
# ./src/index.js
# multi #babel/polyfill ./src/index.js
where the culprit is:
border-width: max( 1px, .015em );. This is invalid sass and can be generally fixed by wrapping with calc border-width: calc(max( 1px, .015em )); as mentioned here
So I have the following questions in order of importance:
Why does this file get piped through the loaders, given it has a exclude: /node_modules/?
Are files from external libraries supposed to be piped through the loaders/plugins in Webpack, or do they have another way of including themselves in the dev/production version?
Why is the .js for babel-loader excluding /node_modules/ but not s?css? (I see such tendency around random webpack.config.js files)
Interestingly enough, the culprit line margin-left: calc(24px + 1em); is actually a valid css according to World Wide Web Consortium. That makes me wonder - should a plain css be piped at all through a sass-loader? Maybe this is not entirely correct, or is it?
What is the right way to fix it?