The answer is that 4xx HTTP errors are not considered a "failure" outcome for a transaction. The idea is that if your HTTP server handled a user request, and there was a client error (i.e. a 4xx response), then there is no error from the servers point of view.
The "Error rate" section of the documentation for the Transactions view doesn't help make that clear. I'll ask some of our docs folks if that could be made clearer.
I also tried downing the API of my application and have a request that return failed. It is not also showing on the error graph. My application is VueJS and added it as a RUM Agent.
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