Currently, there are three enrollment modes for Apple IOS. Device Enrollment, User Enrollment, and Automated Device Enrollment.
My understanding is that these settings – Defer software updates with Delay visibility of software updates – only apply to Automated device enrollment (supervised). And then they should work. Supervised mode allows administrators to fully control and manage devices, and – if necessary – completely lock it down for a single task or single app. Administrators can also, for instance, remove the ability to install additional apps via Apple’s App Store.
https://learn.microsoft.com/en-us/mem/intune/configuration/device-restrictions-ios