If you use a password manager to save your password and don't lose access to the password manager, you are safe.

All you need is your password to sign in.

I was only describing the hypothetical approach we're planning to implement for someone who forgets their password.

And yes, if I'm understanding right, I think those threat risks are very different. One is trusting your device which you yourself have control over, the other is trusting a cloud-based service provided by Apple, which you do not have control over. Not everyone uses Apple products either :)

Edit: But alas, it's a user's choice how they want to save their password. If Apple provides a static key over this service and users really want this option, it's definitely worth exploring further :)