I updated to 16.3 today and the above directions do not work for me. I click Customize and immediately get a pop-up menu and two choices to change wallpaper or edit existing wallpaper. Any attempt to click on the clock just makes that menu keep reappearing.
For what it’s worth, this isn’t the only feature which isn’t working in iOS 16.3 on my iPhone according to directions or to the way the feature is supposed to work as described on Apple’s site.
My iPhone is an 11. It would be nice if Apple listed which iPhones the features would work on to save confusion.