From the FIDE Laws of Chess, article 7.6:
If, during a game, it is found that any piece has been displaced from its correct square the position before the irregularity shall be reinstated. If the position immediately before the irregularity cannot be determined, the game shall continue from the last identifiable position prior to the irregularity. The game shall then continue from this reinstated position.
Put into practice:
- If the moves are logged, then it's trivial to determine the "last identifiable position" and the game can be resumed as if nothing happened.
- If they are not logged (or the two scoresheets differ), the arbiter can attempt to find the "last identifiable position" by asking both players. If they both remember the exact same position, then the game can continue from that position.
- If that fails too (because the players don't remember or disagree), there is at least one "last identifiable position" that can always be determined, the starting position. So yeah, the game is essentially reset in that case.
Article 7.1 applies basically the same rule to the readjustment of the clock, if there is one (with some more wiggle room for the arbiter):
If an irregularity occurs and the pieces have to be restored to a previous position, the arbiter shall use his best judgement to determine the times to be shown on the chessclock. This includes the right not to change the clock times. He shall also, if necessary, adjust the clock’s move-counter.