After discussions with WooCommerce Support the issue seems to be with the attributes for composite products:
“In the tests we previously did on your site, we noticed that the coupon worked successfully with attributes when we added all the attributes that are used for variations in the products that you are using as Component Options.”
So if we chose a parent attribute like “Gearsets” the coupon discount didn’t work (-$0.00 in the cart).
But if the variation size attributes were selected as well (e.g. S M L XL …) then the discount works, but we shouldn’t need to select the component variation size attributes to get it to work.