If you don’t use variations correctly, the first thing that happens is usually a policy warning, where Amazon informs you that they have corrected the violating listing. Sometimes they skip the policy warning and go straight to blocking the violating listings.
If you continue to misuse ASINs, or if ASIN variation misuse is a systemic problem on your account, Amazon will suspend your seller account pending a viable appeal from you. If they don’t deem your appeal to be acceptable, they may decide to permanently close your account.
So don’t ignore policy warnings. They’re your chance to head off the problem before it results in blocked listings or an account suspension.