The updated keyboard should make it easier to use the on-screen one with an Xbox controller. It brings greater navigation to the controller and helpful shortcuts. For example, the X button can function as backspace, the Y button as the spacebar and the menu button as enter. Microsoft also states that it has vertically aligned the keyboard keys for smoother use.
Microsoft first shared that it was beta testing this technology back in September. Now, it's available in the Release Preview version of Windows 11, so you should be able to try it out for yourself within the next few weeks. Hopefully it saves you a lot of time and frustration (and that streamers will come up with their own solutions soon).