Was testing the effect of "Redirect Virtual Disk Updates" during an Instant Restore. No prizes for spotting that Veeam simply creates a snapshot of the VM on the datastore you specify, so any new writes go into the snapshot delta file.
From the manual/help pages:
"Redirecting disk changes improves recovery performance but makes Storage vMotion not possible."
O'RLY

I right clicked the VM and chose "Migrate" and then "Change Datastore". I then chose a new Datastore. This was greeted with a compatibility success message and a warning
"Snapshot directory settings will be reset to the VM's home directory after the migration."
OK fair enough that makes sense and frankly is desirable. So I have kicked off the svMotion.
We're on ESXi 5.5 with Veeam 7 R2a, not sure if something has changed since time of writing (ESXi 5.5 improvements?)