Apple Arcade multiplayer does not work with Screen Time restrictions enabled
Apple Arcade games treat multiplayer as though it is not permitted no matter what setting you choose in screen time for multiplayer restrictions. The settings are in Settings --> Screen Time --> Content & Privacy --> Multiplayer Games (dropdown).
Options in the dropdown are:
Allow with Everyone
Allow with Friends Only
Don't Allow
No matter which of these options you choose, Arcade games deny access to multiplayer. The only way to get around this is to turn off Content & Privacy restrictions entirely.
Related threads / fix ideas (all of which I've read and tried):
Apple Arcade and Screen Time breaking mul… - Apple Community
Apple Arcade and Screen Time breaking mul… - Apple Community
Here is Apple's documentation on how to manage the settings:
Change Content & Privacy preferences in Screen Time on Mac - Apple Support (AL)
Has anyone found a fix for this? Is there an appropriate way to report a bug to Apple?