Art made from a collage of, say, magazine photos does not supplant or substitute for the magazine photos which is why it's much more likely to be deemed fair-use. Despite the collage using perhaps large portions of the copyrighted photos, it is nonetheless transformative in the sense that no-one is deciding to buy the collage art instead of the magazine photo.

Contrast LLM-created code which is certainly a substitute for the original copyrighted work.