It should always have remained a second factor device. It’s not impossible to teach people to use these, European banking did it for years. There’s just no will to do it.
Under this scenario, the first factor can be a short password or even a PIN.
I have physical passkeys, one attached to my keys and another on my desk at home and I absolutely hate software based passkeys. Every single time I'm asked for a passkey it always ask me if I want to use my Apple Keychain first and I wish I could default to physical.
Decoupling logins from the big cloud providers is a clear win for freedom and protection against abuse. People are frequently cut off from their cloud accounts for whatever reason, and I expect this problem to increase as global disorder increases.
(To be clear, I don’t think people should be legally forced to use tokens, but I do think that industry should be heavily encouraged in that direction.)