If you enabled BuildKit globally in daemon.json config, you'll need to restart the docker daemon (systemctl restart docker). If you're enabling it for a one-off build, you'll need to run the build like this:

DOCKER_BUILDKIT=1 docker build -t lemmy:latest .

I had to update some build scripts for a few other projects, and that worked.

Building is different than doing a compose up. If you're making changes to the dockerfile and want to build your changes, then DOCKER_BUILDKIT=1 docker build -t custom/lemmy:<tag here> . should be the correct method.

Then you would change the docker-compose file to reference your newly built image instead of using the docker hub one. See this document.