I am not reporting this as a bug because I sense the issue may be due to a missing configuration on my side.

Although the README lists just two requirements and both of which I have fulfilled, I suppose users with non-trivial setup of their Terraform modules, input variables and/or .tfvars files may need to perform some additional steps.
Unfortunately, I have no idea what those steps would be:

All my Terraform files are well-formed and valid as I run number of checkers as pre-commit hooks.
The Hashicorp's Terraform extension is also happy to analyse my files and outline code structure: