event.target is the element the event was targeted at, which may be inside your data-link element (like the i and span in your div). You can use the closest method with an attribute presence selector ([attribute-name]) to find the data-link element:

const dataElement = e.target.closest("[data-link]");

That checks e.target to see if it matches the CSS selector and, if it doesn't, looks to its parent to see if it matches, and so on until it reaches the document root. If it gets all the way to the root without finding it, it returns null.

Updated Snippet:

document.addEventListener("DOMContentLoaded",() => {
    document.body.addEventListener("click",(e) => {
        const dataElement = e.target.closest("[data-link]");
        if (!dataElement) {
            return; // There wasn't one
        }
        console.log(dataElement.dataset.link + " is the link clicked") // this is returning undefined most of the times.
        if (dataElement.dataset.link !== undefined) {
            console.log("got the link")
            // navigateTo(dataElement.dataset.link);
        }
    })

    // router();
})

<div class="cell" data-link="/dashboard/posts" tabindex="1">
    <i class="material-icons">assignment</i>
    <span>Posts</span>
 </div>

However, please note evolutionxbox's comment. You're recreating basic web functionality using non-semantic elements and JavaScript code. That destroys the accessibility of your page, and even for users who don't rely on assistive technology, it makes it impossible for them to use the advanced features of their browser to (say) open the link in a new tab, etc.

You attach the event listener to the document body. Is absolutely normal that you don't get the dataset: you can click out of the cell, or in a element into this.

You need attach the event to the desired elements with the data-link attribute:

document.addEventListener("DOMContentLoaded", () => {
  document.querySelectorAll('[data-link]').forEach(node => {
    node.addEventListener("click", (e) => {
        console.log("clicked");
        console.log(node.dataset.link + " is the link clicked")
    })
  })
})

<div class="cell" data-link="/dashboard/posts">
    <i class="material-icons">assignment</i>
    <span>Posts</span>
 </div>
 

<div class="cell">
    <i class="material-icons">assignment</i>
    <span>Posts</span>
 </div>