When I think karaoke, I think microphone. It appears this makes no use of a microphone or captures the singer's vocals in any way, it just isolates the instrumental tracks and eliminates or reduces the vocal track.

A microphone (and ideally having your own vocals mixed with the audio output) is the core feature of karaoke, not playing an instrumental version of the song.

The whole point is that you can sing with it, which implies it can capture your voice in some way, even if you aren't holding a microphone.

Singing with something doesn't imply anything about capture. It's just saying that I can sing along to songs without the original vocal while I'm washing the dishes in the kitchen or whatever.

Which will be your phone in version 2, with a little software magic to retune discordant voices prior to the reverb.

And yet most media coverage I can find of the Apple Music Sing release uses the word karaoke to describe it, thinking that will be clear to their readers. I would feel safe saying your opinion is a minority one.

But this has become a pretty silly "debate".

Me, I'm still curious why Apple did not use the word karaoke, and do not myself think it's becuase they don't think people will consider it karaoke, but I understand you do, cool.