Summary: When one goes into the gradebook Single View and clicks "Exclude" next to an activity, it drops the points earned/available for that activity from the category total in which those activities are contained (as well as from categories at higher context).
Teachers love this feature – it makes it so easy to differentiate for various student needs so students aren't held accountable for all activities.
The problem is, if a teacher Excludes "ALL" activities in a given gradebook category, the points earned/available do NOT become excluded UNLESS the teacher also Excludes the gradebook category that contains these activities. This is not intuitive and causes endless issues where teachers thought they Exempted all the points for a category (because they checked off the box next to each activity in it).
It would be fantastic if Moodle could "not" count the points for an activity if the Exempt box is checked next to that activity (regardless if the category is checked off or not). This would make the execution of that page must simpler for teachers to manage.
Student Gradebook without exemptions
All Items in Category Excluded (but not the category itself):
Student Gradebook not reflecting teacher expectations of those Excluded activities to no longer count: