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InDesign will split the file when it encounters a heading style that's been assigned to Level 1 in the generated ToC. Other levels in the ToC will be ignored.
The generated ToC used to govern the file-splitting won't show up in the ePub, if you want a ToC in the actual ePub rather than using the one generated by the ebook reader, then you'd need to create one yourself using links and anchors.
If you attach an epub that you'd made it would be easier to see what's going wrong.
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