There are two different questions hiding behind this one, and the answers are different. Selling several units of the same item is a quantity setting. Selling several versions of one product is a variation listing.
Getting them the wrong way round is the commonest structural mistake on an eBay account, and it is expensive because it splits the one asset that compounds: sales history on a listing.
A fixed price listing with a quantity is the simplest form and the one most sellers should use for stock they hold in depth. One listing accumulates sales, watchers and ranking, and the quantity draws down as it sells.
The alternative, listing each unit separately, throws that away. Ten listings each with one sale rank worse than one listing with ten, and the effort of managing ten is ten times as much for a worse result.
A variation listing holds sizes, colours or styles of the same product under one item number, with a selector on the page and its own stock count per variant.
The gain is the same one: everything the listing earns, its history, its watchers and its position, belongs to the whole family rather than to whichever colour happened to sell first.
The constraint is that the variants have to be genuinely the same product. Unrelated items forced into a family to inherit its history is against policy, and the correction is the family being split by eBay rather than by you.
Different products. Different conditions in the same family, in most categories. Auction format listings, which are single item by nature. And categories where eBay simply does not allow variations, which is worth checking before building the listing rather than after.
Bundles are a separate case and a legitimate one: a bundle is its own product with its own identifier, not a variation of its components.
Merging separate listings into a variation family is straightforward. Pulling a variant out into its own listing loses the history it earned inside the family, and there is no way to carry it across.
So the direction of travel matters. Build the family the way the product is genuinely structured, and be slower to add a variant you might later want to sell as its own product.
A variant that goes out of stock does not usually take the listing down, and it does dampen it: the selector shows an unavailable option and conversion falls.
A listing that runs to zero across every variant ends, and ending a listing with history is the most expensive stock mistake available on eBay. Keeping a small quantity live on the best sellers is worth more than the margin it costs, which is the same argument as on any marketplace and is covered in eBay inventory management.
eBay's search rewards sales history and conversion on the listing, which is precisely the thing consolidation protects. A variation family is one listing to rank rather than six competing with each other for the same query.
The listing still has to be findable: the title, the item specifics and the category do that work, and they are covered in how eBay listings actually rank.