Larian Started Work on Baldur's Gate 3 DLC, Then Canceled It: 'The Studio Was Elated' - IGN
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After announcing that Larian Studios wouldn't be making Baldur's Gate 3 DLC, an expansion, or Baldur's Gate 4, director Swen Vincke revealed that Larian had actually begun work on planned downloadable content before ultimately deciding to cancel it because the team's heart wasn't in it.
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Nobody at Larion got laid off. Larion worked closely with some people at Wizards of the Coast to make Baldurs Gate 3, and those people got laid off.

Larion could make a game entirely on their own with no involvement with Hasbro or WotC (and they have), but they can’t make anything related to Dungeons and Dragons or the Forgotten Realms without Hasbro and WotC’s cooperation.

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