This is all rumor mind you, so take the appropriately prescribed grain of salt.
Apparently there is pressure from Kathleen Kennedy’s wing of Lucasfilm to ditch the Baby Yoda/Luke Skywalker storyline because patriarchy. 

Well, the unnamed author says that despite Hamill being very politically progressive, unnamed but apparently influential Lucasfilm employees associate Luke Skywalker with “conservatism, the patriarchy, male-dominated narrative, etc.” and want nothing to do with him. You might point out that if this was the case, he probably wouldn’t have been the starring attraction in The Mandalorian‘s second season finale, but the outlet says that his inclusion caused massive rifts between Jon Favreau/Dave Filoni and Kennedy.

Lucasfilm has stated there will be real explanations to the internal strife and this is all “BS”.

Maybe. Actually it probably IS bull. But it feels legit, doesn’t it? Add to that the buildup by the tolerant class to fire Gina Carano and you could see this being a thing. Speaking of which, Jon Favreau is firmly in Gina’s court.

Pirates and Princess reportedly has insider knowledge that Jon Favreau, unlike the rest of Lucasfilm, is not publically political, nor does he care about what others stand for — including Gina Carano’s controversial right-wing beliefs. Author WDW Pro writes, “I’m told that the feeling inside Lucasfilm is generally disdain for Carano as well. The problem for all of those who hate Carano based on her worldview and political positions is that Jon Favreau isn’t publicly political… and word on the street is he doesn’t care one iota for the divisiveness. If Carano was employed in any other part of Lucasfilm, she’d be gone, and she would have been let go long ago.”

I’m sure I would probably disagree with Favreau politically but if all this is true, he’s a stand-up guy and I respect him for this.
I’m sure more of this will come out in the coming weeks but if I really had to weigh in on an opinion, I think the woke politics anger is all a smoke screen. It’s really about Favreau putting out something people liked and Kennedy putting out something people rejected. She’s pretty angry about that and like most weak people, instead of doing some introspection she has decided that, like Principal Skinner: