On version 1.17.1, the option is set to true in the config. Axe will only go from full durability to full-1 and stay there. Ocassionally a different axe will lose some durability, but then if I cut a large number of trees, it goes back up to full-1.

Nevermind. There is some other mod that seems to have added a tree harvest thing and they are interfering. I have no idea which mod, but that's my problem.