Navidrome + Feishin has good lyrics support.

I've never used such a feature, but I know that my favorite player, Quod Libet, has an included plugin called "Synchronized Lyrics" that uses .lrc files and you can set the color and font size of the lyrics. It also has a plugin called "Karaoke" that is supposed to remove main vocals from audio. I'm honestly not sure how that last one works, sounds like sorcery.

If you have Jellyfin, the player and the website does offer LRC style highlighting.
On Android there is Symfonium which can does the same.

Feishin works how Spotify and apple music work assuming your lyrics are set up properly

Tauon

supersonic

Plexamp can do that!