Question : What are the best tourist destinations for an expat staycation in Malaysia?

This is indeed a difficult question that has no correct answer. The reason is Malaysia just like its people are so full of diversity regarding touristic sites. To be able to give a more site-specific answer, the prospect has to topically focus on what he/she is looking for. Some example to illustrate what I mean:
a) Cultural and Religious
With the 3 major communities of Malay/Chinese and Indian, each of these communities displays cultural sensitivities and diversity unique to themselves, which even some of the same communities could not explain logically why they do what they do.

b) Historical/Heritage
Each of the communities contributes to the early history of what Malaysia multi diverse. So within each historical and heritage site, there are legacies left down by individual communities. And the most interesting thing is that each of them is merged to create a cultural manifestation and townscape that is uniquely Malaysia.

c) Beaches and mountains
Malaysia being a peninsula is surround by beaches on 3 sides, the East, West and the Southern part with each displaying beach features uniquely its own. On to the island of Borneo, there are also beautiful dive sites that were recognized as one of the most beautiful in the world.
Mountains
So the best answer is tell me what you are looking for, and I can zero into your interest in the touristic sites.