Since you've already confirmed the basics—such as proper iCloud settings, updated iOS (18.5), correct link handling, and no Managed Apple IDs—the problem you're experiencing likely stems from a synchronization glitch, permissions inconsistency, or a network caching issue.
First, consider force-refreshing iCloud synchronization on both your and the invited person’s devices. To do this, go into Settings, tap your name, select iCloud, and toggle iCloud Drive off. After waiting about a minute, toggle it back on. Following this, restart both devices. This step can help clear temporary syncing errors.
If the problem persists, it's advisable to completely remove and then re-share the folder. To do this, open the Files app on your device, locate the shared folder, long-press on it, select "Manage Shared Folder," and choose "Stop Sharing." After waiting a couple of minutes to ensure permissions fully update, re-share the folder by selecting "Add People" and choosing your preferred sharing settings again. Make sure the invited person explicitly accepts this new invitation from within the Files app.
Another common cause for syncing issues is limited iCloud storage. Verify both you and the invited person have sufficient storage available by going to Settings, tapping your name, and viewing your available iCloud storage. Free up storage space if necessary, as limited storage can interfere with proper syncing and sharing.
If issues still occur, resetting network settings on both devices can resolve deeper connectivity problems. Go to Settings, select General, then tap "Transfer or Reset iPhone," followed by Reset, and finally "Reset Network Settings." This process won't delete any personal data but will clear Wi-Fi, VPN, and cellular network settings. Afterward, reconnect both devices to Wi-Fi and test syncing again.
As a more comprehensive measure, signing out of iCloud and signing back in can fix underlying authentication or account-related glitches. To do this, navigate to Settings, tap your name, scroll down, and select "Sign Out." After signing out, restart the device, sign back into your iCloud account, and re-enable iCloud Drive and other relevant services.
Lastly, checking Apple’s System Status page online is a quick way to rule out temporary server issues. If Apple reports ongoing service disruptions related to iCloud Drive, this could explain the syncing problems you're experiencing.
If none of these steps resolve the issue, contacting Apple Support directly might be necessary, as the problem could be deeper within iCloud's systems.