Being in a calorie surplus is the main factor that enables a person to gain muscle, so it is possible for a user to gain muscle on a reverse diet setting. However, the main difference between the muscle gain setting and the reverse diet setting comes down to whether a person wants to gain scale weight or not.
On a muscle gain setting, the system will actually force you to gain a certain amount of weight each week.
On a reverse diet, your calories will be bumped up each week as long as your weight gain is within the acceptable range defined by your setting. If you exceed this, the system will hold your macros steady to try and prevent additional weight gain.
So, while you can gain muscle while reverse dieting (and most people who lift weights probably will), you won’t do it as efficiently as you would if you were in a larger calorie surplus on a muscle gain setting. You also won’t be forced to gain a certain amount of body weight each week, although some will be allowed.