OP here, thanks for helping us - much appreciated.
The best solution is to hide variant combinations that don’t exist (I mean, why show people products that don’t exist?), then grey sold-out variants and change the button to ‘Sold-Out’. That way it’s super clear when something is normally available but is just sold-out.
It still baffles me that Shopify doesn’t properly handle exceptions and thinks this is all Ok - it’s not.