We eventually discovered the "I can't see the number" option after a few user reports (you need to scroll down the dialog when text scaling is modified). Issues were all reported by users who adjusted text scaling in iPhone's Accessibility Options.
The bigger problem is, whoever adjusting iPhone's Accessibility Options tends to be in a senior position and less comfortable with technology. They would have difficulty following the instructions to bypass the challenge code and use OTP passwords instead.
Also, as Steve mentioned, we've also seen the spinning timer occasionally blocking the two-digit code depending on screen scaling and size. At this point, we are just testing a small number of users, and it will be interesting to see what would happen when Microsoft decides to enable number matching for everyone worldwide.