Bluetooth Headset cannot be used as both headphones and speakers

Unfortunately there isn’t, the Bluetooth codec doesn’t have the bandwidth to transmit 3 quality sounding audio streams, only two. So you either get two good stereo streams, or a split mono stream and a mic stream.

Best solution I have found is proprietary dongles, they seem to use unique codecs to sidestep Bluetooth’s limitation here. Or you could use Bluetooth stereo with a separate usb mic (or wireless mod mic).

Jabra’s Bluetooth dongle seems to have decent sound quality but it’s still bad compared to full stereo headphones. I believe LG or someone like that is coming out with Bluetooth earbuds that use a 2.4 ghz dongle for better audio quality

Try to find Bluetooth transceivers that support Hands-Free Profile (HFP) 1.6 or above which supports higher bandwidth audio transmission. Jabra 370 Bluetooth module supports this as do some others; But note it is still mono when on a call and not stereo! Only solution I have found is to use a 2.4 ghz audio headsets, they support stereo with microphone support. This allows me to listen to CD quality background sound effects and music while on a conference call (playing D&D).

This doesn't really work because Headset is what Windows calls the low-quality mono hands-free profile, which, as others have pointed out is garbage for any purpose other than talking. Even my phone, which arguably is what that profile was originally created for, manages to output a much higher quality sound even when using the headphones as a hands-free. Whether it's actually using the mono hands-free profile for output or not I can't tell, but the point is that it's not a technical limitation of the headphones or Bluetooth but just the sloppy implementation in Windows. Frankly, I think in 2021 this is unforgivable and I've created this feedback item https://aka.ms/AAdv6bz - you should vote for it or it MS will never come around to fixing it.

After searching through the internet, from the experiences shared by many, the setup is well identified and understood. For streaming audio use the 'Stereo' or 'Headphones' profile and for Voice calls in meeting apps, use the 'hands-free' profile which gives both output and input (mic).  

But the real problem is not resolved by anyone so far, i.e. when using the 'hand-free' profile for voice calls in meeting apps, the voice is deeply distorted, robotic, slow and unintelligible.  Why the hands-free profile does not work properly (expectation is at least a fairly intelligible voice) on windows 10 PC and for any of the meeting apps voice calls? 

There are some bluetooth headphones/earphones that actually works, but nobody can tell what specifications make it work, what is different on them than the others that doesn't work. Is it the bluetooth version? Is it the codec? is it the driver? 

So we are left clueless on selecting a pair that would work for voice calls on PC based meeting apps.

Yes. It seems it is hardware related. The only true wireless devices for VoIP calls on the PC are very specific and expensive (Jabra, Logitech, Sennheiser...).

I ended up using the same configuration you mentioned. Sometimes I connect a basic headphones with mic to the jack3.5 to route only the mic and avoid background noise (as the laptop mic is more sensitive).

Thanks for your reply.