Your Microsoft account IS an xbox account
It isn't a bad game design because when you active local play it disconnects you from the internet which disconnects you from Microsoft services that keep track of your achievements. Without connection to the Microsoft services you cannot earn achievements.
Okay, now that you have edited it where you say that without saving it, it makes sense. Of course when you dont save your progress its gonna be reset. I honestly dont know how you didnt think that maybe when you dont save your world before it auto saves then it wont save. This isn't a bug this is a problem with you not saving before exiting.
Uhh, not to be rude but this is very stupid. Local play disconnects you from microsoft as microsoft does require internet connection and when you enable local play on switch it disconnects you from the internet. The only way to get achievements is connected to microsoft because that's where they are.
Did you save and quit or just full out close to without saving?
Dude this is my exact problem I reported a bug about the server images not even there but i completely forgot about nothing ever loading I guess I'm just so used to nothing ever loading that i forgot it's a problem