Are you expecting it as some kind of dinamic tool?
As far as I know it works in at least 2 situations.
1. If you are typing text with paraStyle, defined with filled "Next Style" field, and you press "Enter" ==> next para will be formatted (during typing) with "Next Style".
2. If your textFrame is set by ObjectStyle, and its textFrame.paragraphStyle property is choosen, and "next Style" checkbox is checked
==> you can build a logic chain of paraStyles which will be automatically applied to textFrame contents, when placed into.
I suggested restoring preferences because it sounded like the poster had used the feature before ("The "Next Style" function is not working for me anymore!") But it was not working for them now.