That cloudiness is where the decal is not stuck down to the insert surface.

Waterslide decals need a smooth shiny surface to adhere to.

If it's a satin surface, it wont stick well

Generally, you spray your lock-down coat of clear, stick your decals to the shiny surface, and top coat over them

Once they are protected, you can sand the playfield flat

Sometimes you carefully sand around your decals.

Sometimes you polish just the area your decal is going down, and leave the rest of the playfield sanded.

Each case is different, but you will discover many ways to do it "many ways to skin a cat"

The old clear, called DiamondPlate, and the old primer used to seal the wood/inserts before silkscreening, both have a cloudy appearance.

Your modern day clearcoat is crystal clear

On $$$$$$ repairs, the restorer will use a thin piece of rice paper to cloud the insert before spraying the clearcoat.

Your repair looks fine