Ok, so IT IS A BUG. For anybody facing this issue, the solution is to Remove your SMS 2-stage method (At this point you'd have no backup method, only the "Authenticator app" method. Log out and log back in (now you will be actually presented for the option to use the Authenticator during login) Go to your settings and re-add the SMS method as backup; useful in case you loose your phone, etc. Voila... you have not changed anything, but now it works.
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