After some more experimentation I found the cause. Using the brush with the left mouse button makes it dig up the sand or gravel block the same as any other tool. If I instead use it with the right mouse button, then it acts like a brush. This is counter-intuitive. I expect tools to perform their normal stated function with the left button.
Ive been encountering this same issue while exploring new chunks in my world after upgrading to release 1.20.1. My world seed is -343522682, and I’ve been poking around ocean ruins of which the most recent were around (X:5224,Z:-1592) and (X:5480,Z:1576). I use my newly crafted brush on suspicious sand blocks and after a couple of seconds the block breaks, and nothing is dropped. Additionally, the durability on my brush hasn’t changed. I wondered if the sand had to be dry for this to work so I tried placing a door on top of the suspicious sand before brushing it off; the brush broke the block faster, but still nothing came out of it.
I could have sworn I only had powered rails in my inventory when I was setting this up, but I went back into the game to check and you’re right — they were activator rails. I’m surprised you could tell that just from the screen shots because they look exactly the same to me; I could only tell the difference by targeting them with the debug display on.