Just observed this issue on M1 Air. I'll try this the next time it happens: https://uknowit.uwgb.edu/page.php?id=82566
"Press Control+Shift+Power lock/unlock a Mac. This generally gets a Mac working again when it gets stuck on screen saver."
If it works, it's a 5-second workaround with Touch ID, which will have to do for now, until a software update arrives.
Unfortunately this method didn't work. Lid close, lid open looks like the only remedy. Please report this bug: https://www.apple.com/feedback/macos.html