Good to see that others also have the issue. That means that my magic trackpad 2 is not broken :) But I have the issue ony with my external magic trackpad. The draging and click stop working over night. I always enable the soft click on tap and this is working but that does not help with the draging of a window. My embeded Trackpad of the MBP 16 still works fine. So the issue is maybe not just the kind of settings you have. Because for me it only happens with the external trackpad that worked yesterday and I have installed no Update since then. Reboot did not change something. I also use Big Sur (11.1 (20C69)) Maybe someone from Apple can use this information, but guess they already know that.