So the transient hostname is used.
hostnamectl --static set-hostname "" # removes /etc/hostname from system
Great to know.
I’m looking at the journal and the manjaro hostname started appearing in January of this year. It has been impacting my current machines, but it was a new install that really highlighted the bug because it impacts the lightdm greeter.
It seems fallback-hostname has been around since 233. I can’t tell from Manjaro gitlab commits when or if it changed. It looks like it might be the 12/30/2020 Stable update.
This redhat bug report describes what is happening:
Bug 1892235 - fallback-hostname change in F33 broke unset hostname detection logic
I have really been meaning to read the systemd news on all updates. I found this in the systemd-248 news too:
I found the entry below, but the solution seems to be going from Arm 20.8 to 20.10 on a Raspberry PI, so doesn’t help me 
I’m going to change the title, because if I can get the transient hostname correct all problems will be solved 