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Just figured it works only when Snap to Grid is turned off.
Is this how its supposed to work on Illustrator 2020 (mac) ??
"Is this how its supposed to work on Illustrator 2020 (mac) ??"
It's always worked like this. Smart guides only work when Snap to Grid is off.
I'm using a Mac, and after trying all the classics without any results, I realized that the snapping tolerance was set at 0. After changing the snapping tolerance to 4 I had smart guides working as expected.
I hope this helps!
By the way, you can set up the snapping tolerance down to work and the smart guides will work as well.
THANK YOU for posting this! My smart guides randomly stopped working. I went through all of my settings and didn't realize that this was reset to zero; no one else anywhere I had combed through mentiond this detail to get the smart guides working again. You saved both my hairline and sanity with this detail.