It's actually kind of interesting.
Both players will lose their sound/music completely.
However, when each player is within the same screen and close enough to each other, they can ONLY hear the sound effects of the opposite player after the reversion.
e.g. Given A and B; B <=> A; after reverting back to A <=> B, when search is pressed for example to make the sound effect, B only hears A's sound effects and A only hears B's sound effects (while within close proximity). Note: Issue persists between levels (game must be reloaded from save)!
Moreover, this is incredibly frustrating when playing a Rhythm Matching Game (together), since you hear what buttons the other player is tapping and not you.