You can filter and sort a linked records field using these options in the settings.

The filter option on the linked records field doesn't apply to new records being created. If creating records in the linked records field is allowed and you create a record that does not meet the filter, you will still see the new record in the cell. The filter only applies to linked records shown in 2 places:

You can sort or filter the linked records by selecting an Airtable view in the field settings. To find it, please click on the linked records field > Filtering & Sorting.

In the legacy form, this filter option is not for values that are already in the cell. It is for the linked records selector only (which you might have chosen to hide on your form). Note that this is the behavior of the equivalent option in Airtable as well.