Ok, working with Will Monte we've managed to figure this out...

In Edit Profile form..

If a member has "Visible to = Public"
Other members can Follow or Add Friend that member

If a member has "Visible to = Friends" (which for privacy reasons you would advise as a minimum)
Other members can only Add Friend that member and the option to Follow is removed from ALL pages/menus. Note, once you are accepted as a Friend you can then (and only whilst you are still Friends) UnFollow & Follow that person. Notice you Unfollow first as being a Friend you are by default following.

We've also proved this is the behaviour on the UNA.IO site also so this must be by design.

Can someone explain why as it seems backwards to most other Social Network??

First you want to allow people to follow people they do not know or are Friends with for instance you might value someones opinion but don't necessarily want to be friends (following).

Second I don't see the point of being able to unfollow/follow someone you are friends with (unfollow/follow doesn't effect Friends status as you have to unfriend separately)??

It seems like it's a bug?