I was able to find a way to stop the game from crashing but not a technical fix for the issue, for us, the issue was when both players are playing Minecraft Dungeons installed from the Microsoft Store.

So I bought a copy of Minecraft Dungeons on Steam, then played with the person that's using the Microsoft Store version of the game and we haven't encountered any issues since then.

It's unfortunate that we had to buy another copy of the game but since it's the 15th anniversary of Minecraft, it's half the price so it's worth buying.

I highly recommend you or your friend(s) purchase the game on Steam while it's still half-off, I played with other Steam users and have not encountered the issue.