Sorry if this hypothetical’s been done before - I’m sure it may have been one or a few years back, but can’t recall the thread or how it went.
Let’s say that in the near future, Russian forces, at Putin’s behest, roll into the Baltic states (Estonia, Latvia and Lithuania) and blitzkrieg them all, conquering them all in 48 hours. NATO is caught flat-footed and mounts no defense. Putin announces that these Baltic states are now incorporated into Russian territory - that they are every bit Russian soil as Moscow itself - and that any NATO or foreign attempt to “liberate” them will result in massive nuclear retaliation. Ditto for any blockades or airstrikes or any other foreign military response.
So what should the response be? Merely imposing sanctions wouldn’t fulfill Article 5. Announcing that “Russia, yes you can have them” could lead to NATO itself fracturing apart as NATO’s bluff was called - that NATO won’t, in fact, live up to its obligations. Sending NATO forces in to liberate may lead to nuclear winter.