Track inventory by size and color isn't honored by DotFeed at the moment, though they tell me it's coming in the next major version. For right now, all items (product + variant + size + color) will use the variant-level inventory value.
As for your rule:
If ALL of the following are true:
InventoryBalance Is Less Than 1
then set availability =
out of stock
The target attribute name (availability in this case) will vary by CSE, but that's the general idea.