A huge chunk of the world has had all my buildings removed, all the animals and entities in the area were killed and dropped their loot other than 2 Allay which were unharmed for some reason, and the area now has dripstone features and snow layers despite being inside of a Badlands biome.

Additionally, the terrain has sharp seams or borders in places were there weren't before.

It's probably worth noting that other things that we have built are completely fine with no changes to them whatsoever, as shown in the screenshot below.

What caused this?

The only thing that I think could have caused this is that my friend (who's game the world is on) was in the Nether when all the area was safe, then when she came back to the Overworld, everything in the area by the portal (which is the same area as seen in the pictures) was gone. She also seemed to spawn a few blocks lower, as she was in the ground, but it could be that the terrain instead moved up.

My best guess is that 1.19 terrain generation is attempting to overwrite the 1.18 generation, and in attempts to put the terrain back to how it was, the game cleared all the buildings around.

I have also provided an old photo below of the building that used to be there so you can see the damage caused.