I use the "Sometimes combine" taskbar option.
It seems to not make full use of the taskbar when there is an application with a lot of instances open, even though there is space on the taskbar for other applications to be expanded.
This example works as expected (for example both Explorer instances expanded):
But when I open the browser and it restores a load of windows (I have about 20 windows open in the red Brave browser icon in the screenshot), I only see one instance of each app on the taskbar, even though there's room to expand other apps (for example both Explorer instances :
In this example, there's plenty of room for both Explorer instances to be uncombined, however they're being combined.
It's not visible here, but there's a ton of space available on the taskbar