I didn't believe you that it was broken, but you're right - very disappointing. For anyone interested, the bug for it being is at [1] (reported mid 2021).
The build failure is easy to fix, so I created a repo at [2] which builds a program against a glibc with static nss. I verified with strace that it does indeed check nsswitch.conf and try and load dynamic libraries (I'd at least submit my patch [3] for the build failure but I find mailing lists to be a hassle)
All this said, I wouldn't call it undocumented - it's documented in the `configure --help` itself as well as the online version [4], and it has an FAQ entry [5].