Here be demons
Im pretty sure there used to be a tech note from Apple about using an external drive as the location for your home folder on macOS, but if there is, I can't find it anymore.
If you do use an external, removable drive you need to take the utmost care to ensure it is always powered on. If it is not, for example duing an update! then you'll find that macOS can't find the mount point. In my case it overwrote the mount point for my home folder (an external SSD) with a new folder with an initialised new users folders and documents.
External drives and even network folders as Home folders have long been important for macOS users in a variety of settings and that it did this seems very serious to me. If you did not know Unix system administration I would imagine you would believe your data to be lost. It cost me a whole morning to figure it out.
The solution was to sign in as a different admin user to delete /Volumes/Home and it's subfolders and then remove and re-attach the external drive and reboot.
/Volumes/Home appeared correctly and I was able to login again.
I'd wager it would be a long time waiting to for the genius bar to figure that out tbh.
