I have seen a couple of tutorials about how to use the app to achieve this, but the app no longer appears to have such an option. Has this feature been discontinued? Or is my model incompatible maybe?
Yes, you can still make "custom screensavers", no, it hasn't been discontinued, yes, is it model dependent.
No, this functionality is not really documented anywhere, yes, its another support failing from Roku.
Specifically you can use the "mobile screensaver" to make a custom screensaver using photos from your mobile device - but this is only available for 4K models.
Using the Roku mobile app, when you connect to a device and choose the "cast" (media) icon, there is an additional "screensaver" option available for 4K devices.
You can then select photos/images you want to display as the screen saver and options (pan and zoom, speed) for their display.
Once you do that, simply selecting the "mobile screensaver" (which only appears on 4K devices) as a screensaver option on the Roku device itself sets that as the screensaver.