UPDATE: After further exploration... Icon assets are appearing as expected on devices using iOS 16.3.1 Haven't nailed down the version of iOS where the issue was introduced, but it definitely occurs on devices using 16.4.1 Inconclusive if the issue was introduced by iOS or Xcode building for a specific version

Please see below an image describing the steps to go through to recreate the issue:

After exploring device versions, this appears to be a bug introduced in iOS 16. When the device is on 15.x, the compact view behaves as expected. I've raised a bug for the issue.