Am I missing something or is step 3 missing some steps to validate the JWT and define the current_user_id() function?
Taking a look at the docs here:
https://postgrest.org/en/v12/references/auth.html
https://postgrest.org/en/v12/explanations/db_authz.html
It doesn't seem like current_user_id() is a provided function, and the docs claim nothing else is done with the JWT except validating it. It looks like your claim already includes user_id, so you'd have to get it from the claim using:
current_setting('request.jwt.claims', true)::json->>'user_id';