I also think it is something you just sort of struggle with until you get it right… Spoiler alert I still don’t have every nuance of every word in the Japanese language mastered yet

I was a huge supporter of cloze-only reviews until recently, but after a lot of thinking, the secret sauce for learning is cloze reviews to N3, then switch over to ̶t̶r̶a̶n̶s̶l̶a̶t̶e̶ reading for N2-N1. One of the reasons is this exact scenario.
In cloze reviews, during long sessions, it’s tempting to simply start glancing over sentences, reading the highlighted word, and hoping it’s the right one. ̶T̶r̶a̶n̶s̶l̶a̶t̶e̶ Reading forces you to slow down and look at the context, which in turn helps you to start realizing the differences between words.
Are you learning how to actively recall words by translate? Possibly not. However, that’s where speaking practice comes in. The reality is, there are many, many words you probably won’t have to worry about producing in conversation, and when it becomes necessary is when you learn it, either by looking it up, or asking the person you are talking with to help you find the right word.
Finally, the next big part of this really is input (well immersion would be best, but many of us don’t actually live in Japan, so that’s not an option
)… I also want to preface this by saying I am still a very big believer that input doesn’t have great returns until you have a grasp on the foundations of the language, somewhere between N3 and N2. Your time is still better spent laying a good foundation rather than floundering through light novels and manga.
I thought for awhile about a a personal example for this, and the best one I came up with was distribution:
配布, 配分, 分布, 配給 are all translated as “distribution”, but have very different usages and meanings.
I struggled with them, and may still get 配布 and 配分 a little mixed up from time to time, but I came across 分布 while looking at the Pokedex. It refers to the distribution of species across that region. Now, I have a strong mental pathway built and understand the actual context of the word.
配給 is something you will come across in news articles and the like, and is pretty specialized, referring specifically to rations, so that takes care of that word as well. I’m not totally sure I can recall it, but I’m also not sure I’ll ever even need to.
TLDR: Keep slogging away, don’t be afraid to switch some reviews from cloze over to translate, and especially at your level, consume as much content as your schedule allows.