Probably applies for other immersives too, and happens on 1.20.4 Fabric. Does the config not get synced when changed in-world anymore?

Looks like this is an issue in singleplayer specifically. In ConfigScreen#onClose(), ActiveConfig.loadActive() is the config that gets propagated to other players, and what acts. However, for some immersive, at that time, the server config says that immersive is disabled, so the call to loadActive() keeps the immersive disabled.

Instead, if we're in a singleplayer world as the host, we should set ActiveConfig.FROM_SERVER to be a clone of ActiveConfig.FILE before the call to ActiveConfig.loadActive().