For sites/apps that can't fetch the password themselves, people usually copy paste the password. This could allow other sites/apps that have access to the clipboard to see the password.
I mean, I understand that computers managed by typical users will be a shitshow, but much of the problem in that situation is that they don't really care.
The encryption scheme on iOS is nice, but for how much of a game they talk about privacy Apple had the opportunity to do so much more for security around identity/auth and they did approximately nothing.