Auldrick,
I think commentators (myself included) are unfamiliar with bug reporting forums, and just wanted a chance to vent because of the scope of how this bug prevents core gameplay. I think our hope is that we can be told this is a priority for the staff, vs seemingly smaller issues like wall clipping issues or mob spawning. Having this discussion on a forum, or discord would not be beneficial to anyone. To be honest, I do not understand the complexities of debugging games or resource management at this scale, so I won't push the issue further.
That being said, I think Bryan F may be on to something. My household has two copies of Minecraft on two separate Nintendo switches. One switch was signed up for using an email login, the other account was using a phone login (Created through the Microsoft webpage that the switch directed us to). The device with email log in works perfectly, the device that used a phone log in has issues connecting to the Microsoft account.
I would also like to put my $0.02 in. This is a game breaking bug for anyone who wants to use realms. This should be a priority, I have paid for server time (realms), and that time is being wasted due to this bug.
Can confirm! Logged into Microsoft account, and removed the option to use a phone number to log in. The software is now performing as expected, even after game and/or switch reset!