With regards to recruiting and camps, I do hope that college coaches have been through this long enough to recognize the kids who are those late maturers. I've never been through the showcase and camp thing, but I'm sure it has to be a harder path for those kinds of kids.
Having 2 late bloomers, to use the generic term, and being one myself. It is very tough going through the early part and sometimes the full part of HS with all the skill but not looking like it because your body doesn't work with you. Especially now, with the whole "athlete" kick. There are definitely different "late bloomers" like you mention those that physically have the body of a kid 2-3 years younger than them and if they weren't a strong kid to begin with it's tough...., and those that just have a later growth spurt of height. Usually the later you go through Puberty, the bigger you end up being. So there is that. Plus typically, you get the last laugh, if you don't quit.
As far as the quote above, DIII coaches get it because they kind of have to, but if you are just short and don't have some sign of physical immaturity, it's kind of hard for them to project. I get why you bring up the medical issue, if I had a dollar for every parent that said their kid was a late bloomer and they are all of 5'9" themselves, I wonder late blooming into what?
Often, a coach will try and find the parent to see how big they are, so get yourself in shape ;-). D1 and D2, don't have the time to wait, they'll wait for the transfer portal though. IE if your kid is rocking a full beard and is 5'5" he will probably be passed by or he better hit lights out. (by lights out, as my son's hitting instructor says, if you can't hit .400 in HS, you aren't a good hitter).
On the other hand if your kid ends up 6'5 and slender, looks like he's never seen the inside of a gym, and is a pitcher with some skill, DIII coaches are salivating. (to them, that's the definition of late bloomer, you typically have to show the signs of potential for size to go along with existing skill, it's easier to see filling out than up).
Position players, it's harder. But if you can show you can find barrels consistently (regardless of exit velocity), have good footwork at your position, field smoothly and have that 6th tool, there are tons of those undersized guys in DIII, whether they grew more or not. (but if you aren't there yet, definitely don't showcase)
Where you end up from there is up to you, your work ethic and your genetics.
I know I'm insufferably long winded, but I will end with this, if the kid is not a D1 talent and is a good student, please consider first deciding where he wants to go to school based on his desired career, then if he can play baseball there.