ios 14.7…where is passcode setting?

What you’ve posted is below the section with the Face ID & Passcodes setting. Scroll up:

Or enter passcode into the search box at the top of the settings panel, and select the Face ID & Passcode entry from the search results.

Is this iPhone 11 Pro Max a managed device with profiles loaded (Settings > General > Profiles & Device Management), or does this device have screen time restrictions enabled? (Is somebody else managing this device?)

If there are no profiles and if screen time is disabled, I’d back up, reset, and re-load.

If screen time is enabled, shut that off. Or at least enable passcode changes within screen time.

If screen time is enabled and passcode changes are enabled, temporarily disable the passcode changes, restart the iPhone, and then re-enable changes, and see if that resolves this. (This based on a previous similar report.)

Settings > Face ID & Passcode

Settings > Screen Time > Content & Privacy Restrictions, change ‘Passcode Change’ to Allowed.