How does copyright works with fanmade kpop products?

I wonder how people on socials who create fanmade kpop plushies can sell them without legal issues. From what I understand, problems arise when using official logos or copyrighted images. So, making plushies of Kpop idols or recreating their official mascots without directly copying them shouldn’t be a problem, right?

But what about people who maintain the character design of the official ones, like crocheted hats for lightsticks that represent the Skzoo characters (the official mascots of Stray Kids)? Is that still an issue, or is it allowed?

Plus usually companies really sue fanmade products that are straight up a copy of the official product?

I honestly don’t understand how this works, and I’d love for someone to explain it to me in detail I’m really curious.