In a nutshell:
1. Live ammo is never used on set.
2. Sometimes dummy rounds are used to show loading/unloading. If these are not cleared out properly, they can become projectiles if blanks are loaded after them (like Brandon Lee and maybe here).
3. When a gun is to be fired in a scene, no one is supposed to be in the line of fire. In this case Baldwin was practicing pulling the gun out of the holster and apparently accidentally fired the gun, as others including Hutchins lined up the shot.
4. Baldwin was told he had a "cold gun", which was clearly wrong. This had happened earlier on the set, and nothing was done to correct the problem.
5. Yes blanks can kill you at close range. But it is basically impossible that a wadding is all that came out of the gun in this case.
https://www.latimes.com/entertainment-arts/movies/story/2021...
https://www.latimes.com/entertainment-arts/story/2021-10-22/...