I'm not sure I see the distinction. I don't claim there isn't one. I just don't see it.
Determining whether or not a character succeeds or fails from a narrative point of view is a more academic discussion. Reacting to the plot and talking about what the characters are doing is a more casual, "water cooler" type of conversation. That's how I'd sum up the distinction.
As I said, I'm not saying that a character's actions being understandable, sympathetic, or reasonable indicate a better quality of character. Of course, I would say that a well-written character will engage us, and as we watch the story unfold, our feelings and reactions are governed by the aforementioned criteria. It is, as I said, something that we decide almost instantly upon reading dialogue and seeing the action take place. It's only when we discuss it later, put those thoughts and opinions into words, that it becomes a lengthier breakdown.
When fiction has engaged us, it plays out before us or in our minds as though the events are actually taking place. We're focusing on the experience rather than the inner workings, though we may well have an awareness of them. Characters stimulate us and provoke reactions: "Man, he's a jerk. I want to see him get his comeuppance!", "I know she's technically the villain, but her backstory is pretty tragic, I actually feel kind of sorry for her", "He may technically be the hero, but he sure doesn't act like one!", "I don't agree with their methods, but you can understand how it got to this point", "Their intentions are good, but their actions are short-sighted"...and so on.
So, take Marten backing out of the room. One reaction is "Whoa, that wasn't cool, he just cut and run when a friend of his needed help and support." A counterpoint raised to that was essentially "Well, it's not fair to criticise him for that, what, do you expect him to be perfect?" My counterpoint to
that is that no, we're not expecting perfection; however, we do recognise these scenarios, we have our own ideas of what's appropriate and what isn't, what we make of what we see, and how understandable, reasonable, and sympathetic it is to us...which may or may not gel with how agreeable we find the characters to be. In other words, "That wasn't the best thing to do, but I understand why he did it".
It has nothing to do with the construction of the character, whether it's failing or not. That's meta-level stuff. I'm talking about following along with the events in-universe, observing what's going on from behind the fourth wall as if it's actually happening, and having a reaction and opinion on the events that are taking place. That's the distinction.