For example, lets say we have a state machine for a task. The task is currently in the IN_PROGRESS state - and from here it can transition to either CANCELLED or COMPLETE. Either of those states should be terminal. That is to say, once a task has been completed it can't be cancelled and vice versa.
The problem I see with your system is - lets say we have a task in the IN_PROGRESS state. One peer cancels a task and another tries to mark it complete. Lets say a peer sees the COMPLETE message first, so we have this:
IN_PROGRESS -> COMPLETE
But then a peer sees the CANCEL message, and decides (unambiguously) that it must be applied before the completion event. Now we have this: IN_PROGRESS -> CANCELLED (-> COMPLETE ignored)
But this results in the state of the task visibly moving from the COMPLETE to CANCELLED state - which we said above the system should never do. If the task was complete, it can't be cancelled. There are other solutions to this problem, but it seems like the sort of thing your system cannot help with.In general, CRDTs never had a problem arbitrarily picking a winner. One of the earliest documented CRDTs was a "Last-writer wins (LWW) register" which is a register (ie variable) which stores a value. When concurrent changes happen, the register chooses a winner somewhat arbitrarily. But the criticism is that this is sometimes not the application behaviour what we actually want.
You might be able to model a multi-value (MV) register using your system too. (Actually I'm not sure. Can you?) But I guess I don't understand why I would use it compared to just using an MV register directly. Specifically when it comes to conflicts.