I am pretty sure highlight works as intended - it highlights important items only (so not every container, and not every interactable object). Using it you can quickly glance what is important and what is not - and you can interact with the rest (or not) at your discretion.
In my book that is an improvement, as I am pretty sure D:OS2 used to highlight every single object, and the result was unhelpful due to amount of interactables - if you highlight everything, you highlight nothing. There are people like yourself who do wish for a more comprehensive highlight button - personally I can't figure why - if it is an item you can interact with it. I am surprised there doesn't seem to be a mod for it.
