See this thread for an explanation from Neil Banfield.
https://forums.stardock.com/524310/page/1/#3912279
"When taskbar buttons are not combined the icon used is the icon provided by the window itself. This will ignore your custom settings. Only the combined taskbar buttons use the icon from the app executable / shortcut as there could be multiple windows for a single button so if you used the icon from the window it could be one of many choices."
"Okay, I understand the logic. This works fine for my folders with custom icons, but then I guess I have no option to use custom icons for apps. I like the settings with the Enhanced taskbar on, with "Never combine taskbar buttons," and "Always hide text on buttons regardless of group state" checked. This shows open folders with my custom icons as separate buttons instead of the File Explorer icon, which I like, but I sacrifice my custom app icons in the taskbar. The Windows 11 setting "Never" combine works the same way as Start11, so I get it."