Using Microsoft Teams on macOS, including installation, features, and compatibility
I was able to resolve this thanks to a comment on Reddit -
I went to System Settings > Notifications then turned on "Allow notifications when mirroring or sharing the display"
Removed Teams and Outlook from DND exceptions, and tried both Teams default sound and Mac sound, and all is working now. Not sure why the mirroring setting matters, but it seems to for me.
Thank you! This fixes it for me.
The mirroring setting could be in play if you're using DisplayLink drivers (via a dock) to connect your MacBook to external displays. As soon as I read your suggestion, I knew that would be it!