Here is a solution that works for me using Azure Function v4 .NET6 in isolated mode. Prior to finding this solution I tried many combinations of settings in host.json which seemed to do nothing. Now I am properly tracking Entity Framework Core dependencies (as well as SignalR) in both Live metrics, Transaction search, and Application Map within Application Insights.
Local data from a local debug session will show in both the Application Insights portal within Azure (Live and Historical Telemetry) and Visual Studio 2022's Application Insights Search Telemetry. Please note, it takes a few minutes for local data to start populating in the Search Telemetry feature. If you are not finding local debug data, remember that Visual Studio must be running the function in Debug mode and you might also need to connect to the online Application Insights service (instead of Debug session telemetry): 
Try changing the Debug session telemetry to the online instance of Application Insights within Azure. Click on "Debug session telemetry" to change the source of the data.
For reference, this github issue "Correct way to use Application Insights in v4 and .Net 6 #760" led met to this solution.
Add the package:
Install-Package Microsoft.Data.SqlClient -Version 5.0.0
Then in program.cs add:
services.AddApplicationInsightsTelemetryWorkerService();
For reference, a working host.json:
{
"version": "2.0",
"logging": {
"fileLoggingMode": "always",
"logLevel": {
"default": "Information",
"Host": "Warning",
"Microsoft": "Warning"
},
"applicationInsights": {
"samplingSettings": {
"maxTelemetryItemsPerSecond": 5,
"isEnabled": true,
"excludedTypes": "Request;Exception"
},
"enableLiveMetrics": true,
"enableDependencyTracking": true,
"DependencyTrackingOptions": { "enableSqlCommandTextInstrumentation": true },
"enablePerformanceCountersCollection": true
}
}
}