As you say, the requirement to consider all the permutations and combinations does not model reality, because each generation starts with the same "hand."
Let's say you have a poker hand, and you need a flush to improve it. Here's all the possible ways your hand can change, one card at a time.
00: HHHCH need a flush.
01: SHHCH
02: DHHCH
03: CHHCH
04: HSHCH
05: HDHCH
06: HCHCH
07: HHSCH
08: HHDCH
09: HHCCH
10: HHHSH
11: HHHDH
12: HHHHH The winner.
13: HHHCS
14: HHHCD
15: HHHCC
All possible changes are explored in 15 cases (3*5, not 3^5). Evolution "looks" for the small change that will confer a reproductive advantage. A complete reshuffle would most likely give you a busted flush or a dead critter.
Once a benefit is found, that sequence becomes the standard hand from which the next improvement may be found.
How did your bacteria experiment obtain 20 million unique DNA sequences using your above 3*N math (and an "N" of 1953)?
Welcome to Intelligent Design.
Your hand didn't change itself; you changed it.