I want to add to this problem by stating it's not just the main world me and my wife plays on that has this problem, it's anyworld she was on which is 4 different worlds all of her stuff is gone. Anything player data related has been deleted. If I go to manage save data on minecraft it says her profile is 3 KB where as mine is 300 MB. So somehow the update deleted any player data apart from mine which I'm the main account holder and first player in the worlds we play on.
Hate to hear it but maybe since it seems to be pretty common it can be fixed quickly. My wife is a real fan of minecraft so she wasn't too aggravated since we have a huge stash of diamonds. Have an xp farm, a villager trading hall and in a few minutes had most of her gear back although not the netherite version of course. We've decided to dedicate a spot in the main base for her to deposit all her inventory from now on so if this happens again all she'll lose is the levels which we can quickly recover with the xp farm. Just trying to make the best of a bad situation until this problem is hopefully fixed.
Just gonna leave this comment for someone that might help! This recent update reloaded my wife's previous save with all the netherite gear and items she was holding when the last update occured and wiped her. Foreshadowing this event, we have been storing everything in her inventory in a shulker box before quitting out! NOT an ENDER CHEST. Now she has all her netherite gear back from the last update and we have the stuff she's been using the last month saved in a shulker as back up! People who aren't doing this every play session are risking all their progress! PLEASE START SAVING YOUR ITEMS AND ARMOR IN CHEST OR SHULKER BOXES! Don't end a session with anything of value on any persons inventory with the exception of player 1.