...
The whole point is to avoid interruption of power.
That's inaccurate and overbroad.
First, standby systems are not UPSs, so it's not about momentary interruptions. Most standby systems take at least a second or two to switch over. Even those systems that can do it in a 10th of a may still drip your internet until it can reboot. I've yet to meet a client who is bothered by this. Those that care and understand what a UPS is typically already have a UPS or two. So that is not the point.
The point is to have power gor essential needs during long grid outages. Additionally, the point is to be able to use during outages the solar and battery systems that mainly serve other purposes. BTW that's unlike optional standby systems which only supply power to loads during outages. This is one element in arguing that 710 applies, and not 702, for PV/BESS systems that supply loads at other times.
If the battery backup can't handle the load and either trips out the system or is constantly refreshing every X minutes without being able to transfer over what's the point?
Tripping out the system can be a very effective poor man's load management. Think of things like laundry appliances and ovens, which won't turn back on by themselves. For a battery ESS that comes back on a couple seconds later this works rather well, as long as the overload isn't caused by something like an air conditioner that turns back on its own.
It could be argued that such a feature could be a way to comply with 702.4(B)(2)(b), although I admit it's a stretch.
Again, smooth transfer isn't necessarily the point and isn't necessary for these systems to serve a purpose.
...
For me the conclusion is twofold:
1) the disagreement between 702 and 710 needs to be cleared up.
2) 704.2(B)(2), requiring the system to serve the entire connected load or have load management, really just isn't justified and necessary for residential systems (no matter the type of backup power). These systems are
optional, meaning the load served is also always optional. Seriously considering a PI to adjust this.