At a human scale, those boundaries get clarified through litigation on a case by case basis once an infringement becomes large or obvious enough. But there has always been a gray area around when a derivative work crosses the line into infringement.

And AI didn’t create that ambiguity, it just pushed it to a more extreme scale

The problem is that AIs don't have rights. So you literally can't treat it the same.

If I "make" something in a way I'm not allowed to (e.g. copying), the law will go after me. If AI makes something I'm not allowed to, I can just say "whoopsie doodle", blame the AI, and there are no repercussions for anyone.

For example, if you rent a movie, you can watch it with your family. Nobody is going to sue you for distributing the movie with 5 people in your room. That's pure nonsense. Same with music, books, etc.

If you try to play the movie in an establishment with dozens of people, then it can become a problem, because you're essentially a theater now.

I'm not a lawyer so I don't know what the law is on selling fan art on a convention or even privately commissioned fan artwork. But things aren't as draconian as people assume it is.

So if you draw sonic in your living room you are indeed creating an unauthorised derivative work. And someone can call it an unauthorised derivative work. And the only reaction that should induce is raising an eyebrow and replying “ok?”