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It's actually neater than that. It's a cryptographic public/private key that is generated uniquely per service. It removes any risk of a login credential being leaked from the sites, as they just have a public key, which is entirely useless to actually auth with.

Passkeys have terrible branding, with passkeys being used to describe multiple things over time and depending on what you're reading.

Passkeys are similar to Apple Pay. Instead of authorizing a financial transaction, you are authorizing a login.