It should be possible to re-activate a retired product family, and re-activate any retired products with an active parent.

Currently the behaviour is such that retiring a product family will retire all the products in that family.

There is then no mechanism to re-activate the product family, product with that product family parent, nor is it possible to clone a retired product with a retired parent. No button appears in the command bar and trying to change the status via workflow or API results in an error.

We have had this situation occur in error which required a Microsoft support engineer to resolve for us.

For on premise environments a SQL fix is possible but for D365 online you have no access to the database to perform such a fix and will need to reach out to Microsoft.

It seems that the product lifecycle describes an activate option

https://learn.microsoft.com/en-us/dynamics365/sales/developer/publish-revise-revert-retire-activate-products

but also states

Activate a product or kit record

Use the SetStateRequest message to activate only the following types of record:

• A retired product record that does not have a parent record.
• A retired kit record.
• The state of the target record changes from Retired to Active.

 Note

You can’t activate a retired product family or a retired bundle record.

There is no explanation why these restrictions exist.