Kodi has two methods it uses to control volume. The first, if it sees it is connected to a CEC connected amplifier device type it will send a CEC control command when the volume functions are issued through it. Note that most TV’s will not advertise themselves this way so it normally only works this way when you have an HDMI attached soundbar or full AVR. When this is how you are working then volume control and passthrough work just fine together.
If you don’t have the previous type of setup then the volume commands in Kodi will lower the PCM volume level to lower the volume. When you have passthrough turned on it is send unmodified so there is no volume control effectively for audio being send this way. Anything not being sent via passthrough, such as music, is being output via PCM so volume control works for that content.
The OSMC remote does not have the ability to act as a universal type remote such that it could send volume signals directly to your AVR so in this type of situation with a non CEC AVR it may be preferable to switch to a different type of remote.
You may also find additional details in the following guide…