Continuity Camera only works as webcam when connected with cable

Hello svhr,

Welcome to Apple Support Communities!

We want to help get Continuity Camera working as expected between your devices.

Make sure Wi-Fi and Bluetooth are both turned on, on both devices, and then try again.

This can help make sure you meet the requirements:

"Check system requirements

Continuity Camera works when your devices are near each other and set up as follows:

• Your Mac and iPhone or iPad have both Wi-Fi and Bluetooth turned on.
• Your Mac and iPhone or iPad are signed in with the same Apple ID using two-factor authentication.
• Your Mac is using macOS Mojave or later and your iPhone or iPad is using iOS 12 or later.

You can use Continuity Camera on your Mac in these supported apps:

• Finder
• Keynote 8.2 or later
• Mail
• Messages
• Notes
• Numbers 5.2 or later
• Pages 7.2 or later
• TextEdit"

This Apple Support page has the full details: Use Continuity Camera on your Mac - Apple Support

If this only happens when using beta software, you'll want to report the issue using the Feedback Assistant that comes with the beta software.

"Open Feedback Assistant

On your Mac, use one of the following methods to open Feedback Assistant 

• Click the Feedback Assistant icon in the Dock. (Seed releases have Feedback Assistant in the Dock by default.) 
• Press Command-Space bar, type Feedback Assistant, then click Feedback Assistant in the results list.
• In the Finder , choose Go > Go to Folder, type /System/Library/CoreServices/Applications, press Return, then double-click Feedback Assistant.
• In an app, choose Help > Send AppName Feedback. Feedback Assistant is available from the Help menu in many macOS apps. (This method is available in seed releases.)

Feedback Assistant is located in the /System/Library/CoreServices/Applications folder."

Detailed here: Get started with Feedback Assistant on Mac - Apple Support

We hope this helps to resolve or report the issue.

Cheers!