Apple tells us that Face ID works just as you would expect with the new software. Your Apple Watch will give you some haptic feedback to let you know your iPhone has been unlocked. This is similar behaviour to using the Apple Watch to unlock your Mac which has been available for some time. Once again your Watch will need to be in close proximity to your iPhone.
iOS 14.5 also brings a few additional new features including updates to Siri, support for new Xbox and PlayStation game controllers, App Tracking controls, 5G global dual SIM support, minute by minute forecast in the Weather app (UK), and enhancements to handwriting recognition and Scribble (iPadOS) including support for Portuguese, French, Italian, German and Spanish.
There are some known issues with iOS 14.5 beta 1. You can find those here. Please download the iClarified app or follow iClarified on Twitter, Facebook, YouTube, and RSS for updates.