Okay, I could not get iBooks (Books.app) to read aloud your test case epub on either my Mac Desktop or my ipad. So I tried with the official mobi-dick idpf sample epub with media-overlays and it would not work at all either in iBooks.app (Books.app).
I then tried your test case in Thorium on my mac Desktop and both it and the mobi-dick with media overlays performed perfectly.
On my iPad I normally use the BlueFire Reader app for epub3 and it worked flawlessly with your test case and with the moby dick official overlay sample epub.
So I started snooping about how iBooks treats the Read-Along feature. And found this (note the highlighted part of the quote below):
https://help.apple.com/itc/booksasse...oj/static.html
Quote:
Read Aloud Books
Overview
In Read Aloud books, an audio file using a narrator’s voice can read the text on a page and the words can be highlighted as they are spoken. The reader can choose to have the pages turn automatically to keep the session flowing, or set them to turn manually. A tap on the screen displays controls in the upper-right corner of the book to customize the reading and listening experience. Note that read aloud content is supported only in Fixed Layout Books. Apple Books syncs text and audio using Media Overlays, an EPUB-specific subset of Synchronized Multimedia Integration Language (SMIL). This section provides information about Media Overlays, SMIL files, and tips for using Media Overlays to create Apple Books read aloud content.
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So is the epub book that you have that works on ipad iBooks any chance a Fixed Layout epub? According to that quote above, only Fixed Layout epub3 will use that feature in Apple's iBook.app.
Neither the IDPF official media overlays Moby Dick nor your test epub is a fixed format epub3. They are both reflowable format (which is the only format Sigil supports).
So I do not think you are doing anything wrong. Fixed Format epub3's really only make sense for interactive children's books because PDF's are a much better alternative for any other types of fixed layout reading.