What about all the coins that have been locked in wallets due to loss of keys, owners of wallets dying, etc...?
These coins are circulating supply to all effects.
If nobody knows private keys to some coin, we can see they aren't transacted, but the coin is simply waiting for someone to crack the private key. This is extremely similar to what happened in the age of sailing when shipping full of coinage (silver coinage, if I remember correctly) was lost in the middle of the ocean, with submarine technology yet to be invented.
An exception to this is burned coins. Burned coins have been sent to valid addresses that probably correspond to no valid key pair.
The number of lost coins is probably fairly small now but if Bitcoin is going to be relevant for who knows 100, 200 or 300+ years, this number will increase. I guess the reduction of "usable" coins will increase the price per coin and the majority of coins won't ever be lost so this not a significant issue.
Maybe I'm optimist, but the way I understand it, recently transacted bitcoin supply is going to uncontrollably increase and decrease as private key cracking evolves and on-chain countermeasures to cracking evolve as well. That way, bitcoin's supply is contracted by losing the keys of a sufficiently advanced private key technology, and it is expanded by cracking up coins stored using a sufficiently ancient private key technology.
Maybe I'm pessimist, but we don't know that the majority of coins won't ever be lost. I think it's very likely that a global war or other type of catastrophe could impact a majority of the coinage supply for ages (cryptographic ages).
Are there any solutions to lost coins or is this just a feature of the decentralized network?
I believe that finding a solution to every lost coin of every block chain takes a finite amount of energy spent on technology research and key cracking.