This feature works great as described in the documentation when loading your void family into the project environment:https://help.autodesk.com/view/RVT/2022/ENU/?guid=GUID-7C940A08-1F62-465F-89BF-3800E3446FC3
However, this feature does not work when loading your void family into another family (nesting it). When you try to cut the family using the cut tool, Revit wont let you select the void family. There is not documentation describing the limitations of this feature.
"Cut with Voids when Loaded" should work in the family environment (for nested families)!
The only other option we have is to use a face-based family that has a void that cuts the host. However, this type of family will only cut one element in the host family and you cannot make it cut multiple joined elements. The requested update above would solve this issue.