OOOOOOKIE dokes.
After 5 hours of going through insane hurdles and pulling out my hair - I HAVE FOUND OUT THE PROBLEM.
you HAVE to have the Smart Animate enabled on the COMPONENT LEVEL.
Don’t assign any of the Smart Animations to elements within the component - ONLY component level Smart Animations will apply when changing component level state.
Please, Figma team, save others from this insane stress I just went through and just enable variable changes to be a trigger for interactions!!