I also had issues with YSorting this jam. Here's how I did it
1. Ground above YSort
2. on each non-ground entity move sprite up, so that it starts at Y=0 and goes up (trees, player - whatever needs to be YSorted)
3. Use YSort instead of Node2D as containers
4*. (In my screenshots root YSort node on all props (trees, trunks) is actually disabled, as I didn't know what I was doing - you should use Node2D there (or Area, KinematicBody,...) :)