initramfs is missing current symlink to active rootfs image id.
The initramfs init script tries to mount the squashfs by looking at where current points to. But there is no current on the disk. The code that should create this is in mkinstall.sh:gen_overlay(). This appears to be broken after moving to Debian 11 for my build system.
Note that Debian 11 is being used to run mkinstall.sh because the Docker image does not have access to device files.