The latest update for Pokemon Sword and Shield is now live, bringing the pair of games to Ver. 1.2.1. Based on the below notes it’s a fairly routine batch of fixes, but there may be something else at work.
Ver. 1.2.1 (Released July 7, 2020)
A bug in regards to the number of digits for password settings has been fixed.
In regards to the passwords that can be set for Y-Comm and Max Raid Battles, we fixed the bug where players could be matched with others whose passwords were not coinciding.
Other updated content
We fixed several other issues to improve game play experience.
The mentioned password matching bug is the main focus, but according to Serebii this update has also “made it so many raids edited by people cannot be played online”. That would certainly fall under ‘fixed several other issues’, though at this time we have no further details or specifications.