Hello,
We haven't officially released the gift card API yet which why it's hard to find this information. We are actively working on making it public though.
There is two important line item properties when dealing with gift cards.
You must specify "gift_card" => true for the line item. Gift card line items do not count towards discounts amongst other things. This has been decoupled from the fulfillment service as we figured some people will manually fulfill gift card line items but still want the gift card finance logic.
The "fulfillment_service" must be set to "gift_card" as you did. The gift card fulfillment service will only fulfill "gift_card" => true line items. We should have recorded a failed fulfillment for the order with the reason instead of silently failing. We will fix that.
Hope that helps! :)
- Christian