Yes, it is a bit confusing. The problem is that we are used to looking at the Outliner panel, which is the active View Layer. Do not look at Outliner while using TLR View Layers settings, and remember that selected View Layer is active View Layer.

I'm creating a video tutorial to clarify those aspects of TLR.

Depending on the size of your objects in the scene, the focus area can be very small or too big. Go to Split Settings and change Focus Scale.

If there are no objects (or they are hided) TLR will not have anything to process. Make sure there are objects inside, and they are not hided.

NOTE! TLR will not process collections inside the selected collection. That is intended, because maybe you want to create a View Layer from the collection, but for the collections inside of it you want different View Layers.

If the "selected" collection is excluded or hided, that collection isn't actually selected. Selected collection is the one that has its icon brighter than the others. Pay attention to the icon, not the "row" selected in Outliner.

When TLR creates a new View Layer it makes a COPY of the active one. And each time, it makes the new View Layer active (that's how Blender works, there is no way to create them without making them active). Anyway you can setup each View Layer from TLR panel