Passwords and login credentials are dead. No user wants to deal with them. Password managers are a solution to somewhat sanely and securely manage this complexity, and not something that the average user wants to think about. In that sense, they don't improve security overall, and introduce many other issues (a centralized honeypot, in the case of services like LastPass).
The industry has been trending towards OTP, FIDO, WebAuthn, and all sorts of identity solutions, instead for years now. It's clear that nobody wants to manage credentials, and having a separate security device is not something mainstream audiences will adopt, so maybe by integrating it with smartphones, this will finally catch on.
It will likely take years for most of the industry to move away from passwords, and we'll likely still require traditional credentials in some cases. The myriad of standards out there is a hurdle for adoption, but it feels like we're settling on something that might be usable for everyone.