Union + Omit fails and incorrectly "flattens" the type

[mrousavy]

Bug Report

Hi!
I'm having a type that allows the user to provide a type + resourceId + size (all required).
Once the user also passes a overrideURI parameter, the type + resourceId + size props become optional.

This works out great, but once I start using Omit<> on that type to remove a property that is contained in both types I get an error.

Here's a TS playground with a minimal reproducable sample: www.typescriptlang.org/play?.......

🔎 Search Terms

• Union + Omit
• Failing by incorrectly flattening
• Joined optionals
• string is not assignable to undefined

🕗 Version & Regression Information

• This is the behavior in every version I tried, and I reviewed the FAQ for entries about unions

⏯ Playground Link

Playground link with relevant code

💻 Code

export type WithOptional<T, TProps extends keyof T> = Partial<Pick<T, TProps>> &
  Omit<T, TProps>;

export type WithRequired<T, TProps extends keyof T> = Required<
  Pick<T, TProps>
> &
  Omit<T, TProps>;
  
interface CuventImagePropsBase {
  resourceId: string;
  type: "profile" | "group";
  size?: "full" | "thumbnail";
  
  style: Record<string, unknown>;
}

export type CuventImageProps =
  | ({
      overrideURI: string;
    } & WithOptional<CuventImagePropsBase, "type" | "resourceId" | "size">)
  | ({
      overrideURI?: undefined;
    } & WithRequired<CuventImagePropsBase, "type" | "resourceId" | "size">);

const CuventImage = (props: CuventImageProps): React.ReactElement | null => null;

interface AppProps {
    // THIS OMIT CAUSES THE PROBLEMS BELOW
    imageProps: Omit<CuventImageProps, 'style'>;
}
function App(props: AppProps) {
    // Types of property 'overrideURI' are incompatible.
    //    Type 'string' is not assignable to type 'undefined'.
    return <CuventImage {...props.imageProps} />
}

🙁 Actual behavior

The Omit<> call causes the TS union to be flattened incorrectly and makes the overrideURI parameter behave incorrectly.

🙂 Expected behavior

I expect it to behave exactly like without the Omit<>, just the style prop (prop that I omitted) should be missing.

[mrousavy]

Looks like this is intentional: #31501