I would have small fruit/flower buds on my fig tree and then they would shrink/retract back into the nodes. I also find that some of the green figs feel soft to the touch. At first I thought it was due to lack of watering. I am not so sure now.

Can anyone tell me what is going on? Thanks!

PY, welcome to the forum.
A lot of my breba figlets shriveled up this spring because they formed indoors, and I suspect they didn't have enough light or heat.
Some varieties, like improved Celeste, are known to drop small figs if they are deprived of water.
For this reason, I planted mine in ground this year, to allow the plant to grab its own water from the soil as it needs it.

I don't know if this is true, but I heard/read somewhere that fig embryos should not be touched, or they abort. Maybe someone will confirm or deny this for sure.

Mine are outside Ruuting. 2 yrs ago I got 3 figs from my Celeste and I didnt water much, so I ended up with shriveled marble sized fruits which were inedible. This yr I have been watering quite a bit. Some fruits feel firm and some soft. Would like to know if anyone has this problem. I found that with the Celeste if I dont keep up with watering (they are in containers the fruits will retract back into the nodes but I am not too sure now. I have almost 30 fruits on my Black Jack, just forming but this morning, many of them retracted back inside but I do have some bigger ones. I have been diligent with my  water so I am not sure what is going on.