I didn't see it either but I was able to enable it. Here is what I did:
1. In Notes, I clicked the 3 line menu.
2. Click the gear icon.
3. Click the Toolbar add-ons
4. Turned off the "Auto-fix shapes"
5. Exited the settings and opened a note.
6. Closed the note and went back to settings.
7. Enabled the "Auto-fix shapes" option.
8. Opened a note and there was the icon and it worked great.
I opened create a note and clicked the 3 lines but didn't see a gear icon. Am I at the right place? Thanks.