From what I remember, /e/ developers deactivated the option to format the SD card as internal recently. The reason is that under Android 10, this way to format the SD card kept causing major issues with saving files etc. (e.g. photos taken were simply not saved and were lost). And I can confirm that these problems occured (previously) both under /e/OS and the Google-certified Fairphone OS.
The internal SD card option is planned to return once the aforementioned issues have been overcome.
See “SD card data save issue” here: