Server/singleplayer freezes (server errors out and crashes because tick takes too long) when using /mw create test normal (does same with end/nether). Have done some trouble shooting and found that it is when i have ANY datapacks for the server or singleplayer save.
When i remove datapacks from the server or singleplayer save i am able to create a new dimension no issue...
If i then go and add datapacks back to the server or single player save, for the server it errors out when trying to join, and then server crashes. For single player, world loading just stops at 100% and freezes; minecraft doesnt crash and no crash log.

Is there something that is making this not compatible with datapacks?

I also encountered this issue. Thanks for narrowing it down to datapacks- removing them works as a temporary solution. I can post a crash log if needed.