Thanks @Pramod Vasanth for you reply.
Could you share how you confirmed that my use case should work? My Function is running in Azure Static Web Apps. My function.json already specifies, { "bindings": [ {"authLevel": "anonymous", ...}
Since posting this question last week I've heard back from Microsoft, confirming this is an known issue see https://github.com/Azure/static-web-apps/issues/165, there is no date for when this will be fixed but the github issue includes a workaround.