** Update - just went back into notes and checklist option is available again!**
no idea why 🤷‍♀️
I was creating a list on notes on iPhone and decided to add the checklist. I hit the checklist button and it inserted the check circle. But it was in the wrong place so I backspaced to delete it and now the checklist option has gone grey.
It was working ok a short time ago when I was checking things on a different note.