Definitely broken for me on Excel version 2302 (build 16130.20714) on an En/US locale.
None of the ISO8601 formats I've tried are recognized. "2023-08-22", "2023-08-22T01:38:22Z", "20230822T013822Z" are all valid ISO8601, but Excel treats them as unformatted text. Inputs with slashes are instantly recognized as a date.
If it works for you, it may be a locale thing. But getting away from that is the whole point of ISO8601.