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It does not reset characters or progress. You do not lose weapons, equipment or currencies, unless it is a currency/etc that is specifically being retired.
What gets reset is the Season Pass rank.
And if you want to be technical about it, even that doesn't get reset, you'll keep whatever rank you earned for S20, but ... it's for S20. S21 will have its own ranking system, and you'll start at level 1 for that.
Your character, your gear, your weapons, (your money, your inventory, etc) and the light level thereof will remain. Sometimes the Pinnacle and Powerful caps are raised but they're not supposed to be for S21.
Note also, each season has its own special vendor/bounty giver, and you'll start out at a rank of 1 with them too (assuming you have the Season pass for S21, otherwise you can't access the seasonal vendor).
One of the biggest things that gets retired at the end of the season is the Seasonal Artifact. When S21 starts, there will be a new intro mission (which will launch automatically the first time you log in after S21 starts), once you complete that, you'll be given the new Seasonal Artifact for S21.
All of the vendor engrams go away as well, right? I should go ahead and spend those? Thanks