Using the MS Store version of MSFS, a “reset” is equivalent, it seems to me, of a soft re-install.
If the downloaded package folder is in the default location of
C:\Users\username\AppData\Local\Packages\Microsoft.FlightSimulator_8wekyb3d8bbwe\LocalCache\Packages
then all downloaded packages for the game, including marketplace purchases and the community folder will get wiped by this procedure.
To avoid losing this content and to prevent having to download everything again then this content can be moved prior to initiating the “reset”. Details on how to do this are found here:
https://forums.flightsimulator.com/t/how-to-change-the-installation-path-of-installed-packages-inc-community-folder/471682
(I would recommend everyone use such a custom path for the installation of game packages, rather than use the default directory structure prompted during initial install)
If the install directory is in a custom folder, then from my experience a “reset” should not cause any loss of peripheral settings but may require going through the initial stages of setting up all preferences within the sim e.g. graphics and assistance settings. It will also potentially remove the progress accumulated for certain online activities e.g. bush trips, training missions and log book. These can also be backed up and restored (potentially) by backing up the folder:
C:\Users\username\AppData\Local\Packages\Microsoft.FlightSimulator_8wekyb3d8bbwe\SystemAppData>wgs
and copying that folder back into the same location after the “reset”.
If this is done prior to MSFS being first run after the “reset” then it may also prevent some other aspects being lost- although I have not yet tested this.
All of these comments are based solely on my own personal experience and are not to be considered as “official” advice.