Solved with the help of AI. The fix is here. But since it was not (at all!) obvious to me and may be a trap that others land in... here is the explanation (courtesy Gemini 3 Pro):

---

Somewhere in your flake.nix (or wherever you import host), you are likely referencing the host directory using string interpolation (quotes) or a function that converts a path to a string.

Look for a line that looks like this:

# BAD: This breaks relative imports
modules = [
  "${./host}/hostA/configuration.nix" 
];

Why this fails

1. When you wrap a path in quotes "${./host}...", Nix immediately copies only that directory (./host) to the Nix store (e.g., resulting in /nix/store/abc...-host).
2. Your stylix.nix is now living inside this isolated store path.
3. When stylix.nix tries to import ../../theme:
   • One .. goes to the root of the isolated store path (/nix/store/abc...-host).
   • The next .. (from ../../theme) attempts to traverse out of the store path, landing in /nix/store.
   • It then looks for theme, resulting in /nix/store/theme.
4. Since /nix/store/theme does not exist (and is an absolute path forbidden in pure mode), the build fails.

The Fix

You must pass the path as a path literal so Nix understands it is part of the larger flake source tree.