[2021] Erased progress - Bug?

It sounds like it could be an issue with Steam Cloud Saves, do you have that enabled on your Valheim install?

Steam cloud saves often cause conflicts with the world saved on your computer, it is just not a reliable process unfortunately :( they can easily get de-synced. Which can cause the world save on your computer to get messed up if the old cloud save takes priority.

I would turn it off for VH if I were you so that you can be confident the world save on your computer is the controller for your progress. I'm sorry for your lost efforts :(

Edit: It's a good idea to turn off the Steam save for most games tbh. Especially games like this where you're putting a lot of time into creating custom bases.