The app is riddled with problems. It was rushed out in a dysfunctional state, who knows why. Bluetooth connection is finicky and takes multiple tries. Even after you successfully connect, the phone app shows as disconnected. You can send messages but can't receive. All your text history is erased every time you restart the app. No group messaging, images, gifs, or really anything other than basic texting. It reminds me of computer functionality in the late 90s. I cannot understand how something like this was released to the public.
One user reported that changing the messaging setting to "Show preview when unlocked" fixed it. That did not work for me. I've tried adjusting every possible setting, restarting multiple times, reconnecting with Bluetooth multiple times. Nothing works.
Hopefully Microsoft will fix it in the next two to three years.