Issuers can publish the identity state using Identifier either to issue or revoke the claim. Can this publicly available identifier be traced back to know what all credentials particular identity holder holds?

The identifier of the user is the same one that you see on the wallet ID. When the issuer is updating the state because it is creating a new credential for the user, the identifier of the user is not visible on-chain, this information is not available. The only information that is public on-chain is the root of the three. No PII is available.

The identity state is the collection of three Merkle trees, but when it is updated on-chain, the only thing that is updated is the hash of the three Merkle tree roots.