As soon as the third-party candidate starts to become competitive, the spoiler effect returns. It becomes risky to vote for your true favourite, and voters are forced to vote strategically as they do now. So IRV will not help us escape from polarized two-party politics; it will continue to entrench the duopoly.
IRV has other serious problems with fairness (a much higher spoiled ballot rate, disproportionately in low-income areas), practical implementation (requiring a redesign of ballots and counting software), and security (it isn't summable, which makes it harder to conduct a risk-limiting audit).
Approval is also imperfect, but it is simple, cheap, effective, and has none of these problems.
edit: found your explainer elsewhere, currently reading. edit edit: Huh, that is weird.
Biden would be eliminated first, because he had the fewest 1st choice votes in the first round.
The Dave Chappelle voters' 2nd choices for Biden don't matter: they're thrown out because Biden was eliminated.
So, it comes down to Chappelle with 40% and Trump with 45%. If none of the Biden voters listed Chappelle as their second choice, then Trump wins. If enough voters had Chappelle as their second choice, then Chappelle wins.
The lesson from this example is: it's quite possible that your second choices don't matter, because they're eliminated too early. We could come up with other examples that show that it isn't always safe to put your first choice first, either. IRV/RCV is non-monotonic, which means in some cases you can cause a candidate to lose by ranking them higher.
Also, wikipedia has an example of a non-monotonic result here: https://en.wikipedia.org/wiki/Monotonicity_criterion#Instant...
This is actually not true and the opposite of what happens. With RCV, people feel comfortable putting compromise or 3rd party candidates first because they know they aren't throwing away a vote. It creates a system where there is more middle ground and less black and white 2 party systems.