If inventory status feature is used, how do we move inventory from one status to another? E.g. good to damaged or vice versa Is this possible only via Inventory Adjustment?

Check here. https://docs.oracle.com/en/cloud/saas/netsuite/ns-online-help/section_161894442589.html#:~:text=To%20change%20the%20inventory%20status,page%2C%20tap%20Change%20Inventory%20Status.

@karlenigma it looks like it requires WMS?