Why isn't Malloc failing?

If this is still behaving as described, you can (should) report it here with your test sketch: Issues · adafruit/Adafruit_nRF52_Arduino · GitHub

There appears to have been a change in the core about 8 months ago entitled "clean up malloc/free" clean up malloc/free · adafruit/Adafruit_nRF52_Arduino@781f3dd · GitHub which could be relevant to this.