If you make a new character to be a part of the season, yes all side quest will be reset as you are playing a different character. Only campaign completion, alters and map explore will carry over to a new character.
Nothing happens to your current character though, nothing is deleted and nothing is reset. You can continue on that character forever, you just will not be a part of the season.
This got me too, in games I always spend a lot of unfocused time exploring and doing side quests. Had no idea the game state freezes at 50. When I figured it out I had to focus myself and finish the story to open up the game.