@jrkrideau Thanks for the reply !
This is working ok, but uses DiagrammeR which is an R package and not the built-in support in Quarto. I'll add that to your answer.
Also, please see FAQ: How to Format R Markdown Source to learn how to format correctly raw markdown with chunks. I edited your post.
@lloydbrodsky what is your complete document ? This works ok
---
title: "Test"
format: html
keep-md: true
---
```{mermaid}
graph LR
A-->B
```
This is expected as the IDE does not know how to run those chunks, they are only evaluated in rendered and preview mode using Quarto but not in Notebook mode.