Traceability gets messy once several small lots are merged

My confusion with traceability after merging several small lots is that the idea makes sense on paper, but practical execution looks much less clean. The more I ask around, the more I hear opposite conclusions from people who are all experienced. That usually means the answer depends on context more than people admit.

For members here who have worked with traceability after merging several small lots, what condition makes it useful and what condition makes it mostly noise?