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I don't think it does. That quote is from the section explaining how to configure "Password" authentication. i.e. to use Password authentication, you must enable it on the target server.

It then goes on to list how to use Kerberos or Public Key methods.

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You are right, I missed the one liner above this that stated it needed one of these methods: [password, kerberos, or public key]. However, it does sound like if you use the docker image that you need password logins on the primary machine unless you modify the docker image to add a public key. I may just be reading wrong again though.

[Edit]: This diagram was really helpful: https://raw.githubusercontent.com/cockpit-project/cockpit/ma...

Reading again, it does look like the installation is limited in some way if you choose to use public keys and your user doesn't have the privileges (without sudo) necessary for some of Cockpit's commands it tries to run.

Note that when a user is authenticated in this way [public key] the authentication happens without a password, as such the standard cockpit reauthorization mechanisms do not work. The user will only be able to obtain additional privileges if they do not require a password.

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