Resetting your sync password purges the information from sync, as a security precaution, unfortunately. Going forward it should save things, but are you saying it isn't now?

Unfortunately indeed. This makes no sense. What if my Firefox installation was broken and I wanted to install a fresh version, then get my settings back via Sync? So if I forgot the password, I'm basically screwed? This is exactly what happened to me.

Boy, I'm already the odd one out among my friends, who all use Chrome. They don't have this problem and I feel pretty stupid for using FF when I could have used Chrome. I'd have had my settings and extensions back in seconds. But I had to spend an hour today resetting all my passwords that FF was meant to remember.

I'm heartbroken. I love FF, but this is such a stupid feature that has wasted a lot of my time.

If you change the password of the Sync account or request a new password because you do not remember the password then all data previously stored on the Sync server will be removed and this data is lost and can't be recovered.
This is because this password is used to encrypt the data locally before uploading to the Sync server, so only that original password can decrypt content that is on the Sync server.
This is how Sync is designed regarding privacy and security and you should always make sure you do not forget the email address and password for the Firefox account.

Well, I guess that settles it. I'm switching to a different browser. Thank you for the answers.

.... What if my Firefox installation was broken and I wanted to install a fresh version, then get my settings back via Sync? So if I forgot the password, I'm basically screwed? This is exactly what happened to me. ...

Merely un-installing Firefox and then re-installing "a fresh" Firefox wouldn't result in losing your Firefox data. The un-installer routine doesn't touch Firefox saved data.

Sync isn't intended to be used with a solitary device; in lieu of a proper backup of Firefox data.

With a 2nd device, Sync data would be on that device (irregardless of the OS being used there) so that when connecting to Sync again with a new Firefox Account / Sync password that "copy" of Firefox data would repopulate Sync and then that data would transfer your Firefox data to a fresh Firefox installation, even of the user deleted that data.

(more commonly Windows OS are what come up here in that regard where the user needed to re-format the hard drive to reinstall Windows and then all their applications, too)

Thanks for the answer. None of that happened, even though I was also synced with my mobile browser. It didn't reuse local data probably because I switched from the Snap version to regular version (advice: do not use Firefox Snap. It's terrible).

And perhaps backup is not a sync feature. But I know that if I had used my Google profile on Chrome, I'd have lost nothing. Ditto for other browsers I've used.

So, maybe this is Firefox not following best practice. I don't know. All I do know is it sucked and I had to redo everything manually.

I know people are defensive and passionate about Firefox, but I'm not that picky. I have to do my job and I need my browser to bat for me. Firefox struck out. I cannot overstate how big a problem this caused for me. Goodbye Firefox. Life's too short.