The phoneNumber used in our examples is just a placeholder, and it looks like we do not consider phone numbers that start with 555 (or any toll-free numbers like 888) as valid.
I was able to add the SMS factor for a user in my own dev org thats in the same format (+1-xxx-xxx-xxxx for US), but with a valid phone number (including area code). So be careful putting dummy or test numbers in here as our backend validation may reject!
Thanks, I tested, the standard implemented by okta is to remove any dash, and it worked.
I still don’t understand why the documentation shows an invalid format, but my problem is solved.