headsets no work (console bugged?)

First check if your headset is turned on. With your headset plugged in press the Xbox button in the middle on your controller, scroll all the way to the right, click "Audio" and select "On" If it is already on, please try these methods listed
below.

Updating your Xbox Controller -

1. Settings > Devices & Streaming > Accessories > Click on the 3 dots below the option "Configure" > Click on "Firmware version" > Then update your controller

Restarting your Xbox / Controller -

2. Hold down your the Xbox button on your controller for 10 seconds > Once it turns off, please hard reset your xbox > Hold down the Xbox power button for 10 seconds until the Xbox shuts off > Remove the power supply from your Xbox console for 10 seconds
> Then plug it back in, start up your console and try out your mic

Common Checks -

3. Check if the controller(s) audio inputs are damaged > or if the mic is damaged / not plugged in properly. Check if there is anything in the controller audio hole that may be causing issues with your headset,

If you are still experiencing issues, please contact the support team via this link; https://support.xbox.com/en-US/

Try Setting up a headset adapter.
Also you may need to Update your controller firmware.
A new update was released recently.

Which headset are you using?

If none of the troubleshooting works Microsoft is aware of a bug with third party headsets

Soft Reset did not work, still on headset audio.

It's definitely in the software, perhaps a preview bug.