macOS bug that's been there for multiple generations now.
Workaround:
- Put in any new rule (like that one) then "OK"
- "Duplicate" the rule. I've taken to naming it slightly different too like appending the date.
- Delete the original rule.
- The new rule will probably work thereafter.
However, if you opt to add another rule, you need to repeat that duplicate, delete.
Yes, you used to be able to just update a rule, "OK" and the new rule would regularly work. Now you have to somewhat outsmart how iCloud will deal with things... and hope Apple will get around to fixing this sooner or later.