Indeed they do continue holding an aggressive posture here despite buffer zones being established and what seems like mutual desire to not escalate this conflict.
The main thing keeping the Indians at bay is the terrain. They simply cannot easily establish supply chains up 1000m+ of altitude from their core military positions. There is no way for Indians to easily mobilise AND perform a large scale invasion. The few camps and patrolling ground forces the Indians keep outnumber the PLA 10:1 if not more BEFORE this incident (aka India's attempt to take some no man's land while China appeared to be buckling with Covid in early 2020). Now it's a bit more even BUT the both sides keep some very token units around and certainly not enough to perform any serious invasion. India has supposedly reinforced the back end of this (before major climb in altitude) by hundreds of thousands of men, enough for serious invasion but India simply cannot maintain supply chains for such an invasion. Not the US nor China could realistically maintain such a demanding supply chain to go up thousands of metres. The energy cost is simply unrealistic.
Therefore I agree that defusing and not demarcating is still acceptable for China especially since it managed to establish (aka get India to agree to) buffer zones that are far more in favour of China's previous positions and current positions ie China took two steps forward and one step back while India took one step forward (initial incursion to take some parts of previous no man's land) and two steps back. However the solution is still demarcation. If India turns around in future, it's not even outrageous to simply give India no man's land stretch and demarcate along China's 1950s to 1990s offer. India would need to accept that they cannot get Aksai Chin though. That is a definitely line of no compromise, the rest, China always seemed to be happy to compromise since it OFFERED to many times in the past at the refusal of India.
Pivoting the conflict to Indian Ocean is a distraction of resources from a far superior and aggressive adversary - USA. The Indians talk lots, do little, the Americans talk little (on how awesome they are, how they should go to war and do this and that etc like Indians brag) and do more.
China has the world's greatest great wall separating itself from India, the Himalayan ranges around south western Tibet honestly make Indian ground force invasion a suicidal mission for India. Naturally the conflict is already in Indian Ocean. India in wartime would try to block Malacca Strait. PLAN probably wouldn't send surface fleets to untangle Indian navy but sink them from the mainland with DF-26, DF-100, and various long range HGV missile (cruise or gliding, China's got them all) to sink those capital ships. PLARF would only require to shoot off a few and sink a few capital ships of IN and the message is sent, unlock the strait and do not hassle Chinese ships. Gwadar port and pipelines earn China other routes towards energy exporters.
Indian naval AD is pathetically bad. Easily the worst. One AD system only with a relatively outdated and low power multifunction naval AESA - mfstar. It's roughly first generation Type 346 but with less than half the T/R and slightly less power. The AD missile is a medium range, low speed, low energy missile. Intercepting conventional anti ship missiles is indeed it's main purpose and where it is strongest due to having relatively low energy and speed. Not great against high energy aircraft like fighters and absolutely useless against hypersonic glide and MaRV type weapons... basically anything that moves around even a bit and requires the interceptor to move towards an updated interception point hence draining its already 30% lower energy compared to missiles like HQ-9 (much less energy than this) or HQ-16 or 5-5-5 (much less energy than this one).
