'Constraints' are just contingencies to manage the stabilty of the grid, sometimes during equipment outages but mostly under 'system normal' conditions.

Remember, gen is dispatched in price order, subject to 'constraints'.

Note AEMO are not twiddling knobs (well some of them are &#129322 to control flows across interconnectors (or any other transmission equipment). Rather they dispatch generation in an order to achieve said flows.

Simplified example 1:

Windless night in SA, demand of 500MW. Interconnector from VIC rated at 500MW.

Available gen:
300MW at Torrens Island SA for $50
200MW at Pelican Point SA for $60
500MW from Loy Yang VIC for $30.

You'd expect:
500MW demand to be met by Loy Yang via the interconnector and price be set at $30.

Outcome:
Torrens dispatched for 300MW.
Interconnector 'constrained' to 200MW as contingency for loss of Torrens (ie - if Torrens trips, interconnector can then flow the additional 300MW).
Pelican not dispatched.
Price set at $50.

Have not read rest of thread, sorry. Could spend days in here. Maybe over a few beers sometime.