Taxonomies structure help

Posts are essentially just data containers. If you are not using posts for their intended purpose (blogging), they can be re-purposed for another use. But it can be confusing for “posts” to represent “products”. You may want a custom post type just so the labeling makes sense.

Taxonomies are for organizing posts. If the data relates only to one specific post, that is post meta data, not a taxonomy term. You can query for posts having a specific meta data value just as you could query for posts having a specific taxonomy term, so in fact either can be used for organizing. The difference is more semantic than functional.

Product name would be the post’s name or title. Featured image is technically meta data, but it’s built-in, so not really germane to your quandary. Release date could be the post date, since it’s editable, or could be meta data. Type, format, manufacture could go either way. If you will be frequently querying for all products with one of those attributes, it should probably be under a taxonomy because tax queries are more efficient the meta queries.

Whether a taxonomy is flat or hierarchical depends on the nature of the terms. If lesser terms could fall under more broad terms, it’s hierarchical. If terms stand on their own and are not organized under broader terms, it’s flat.

Ultimately, do whatever makes the most sense to you. WP doesn’t really care, it needs to make sense to us humans. You are smart to want this to be right from the start though. It becomes more difficult to change things around the more the data set grows.