As Sahib explained in replies on Reddit and X, Hytale is serving as the host for the crossplay session, and while block placements are translated to equivalent blocks on the Minecraft side, it seems like only the prototype’s Hytale player is capable of placing new blocks. Considering he’s handbuilding a bridge between two different games with their own systems and mechanics, it’s not surprising that Sahib says “currently many things are Broken.”

Based on this, it sounds like the Hytale server is providing map data to the Minecraft session, which is why the block placement works on the Hytale side but not the Minecraft side. He must have created some kind of translation table for block types between the engines.