The extension is reloaded, e.g. in Fennec it shows Fennec's extension configuration page for uBlock Origin.
Tab-zero is shown. Following the calls from settings.js to vapi-background.js points to the runtime.reload() function.

Thanks for filing. This only seems to happen if uBlock settings is the only open tab. The expected behaviour (working with multiple tabs) is that the settings tab is closed once "reset to default settings" is complete. So, this is a UI issue we need to fix.
I've verified that uBlock is properly reloaded and reset to default settings.
The UI issue is a fallout from https://github.com/mozilla-mobile/android-components/pull/7759. When the tab is closed we're not releasing the engine view and therefore see the tab contents left on the screen.
Let's track this problem (it's not specific to uBlock) in this ticket: https://github.com/mozilla-mobile/android-components/issues/7868