This isn't unique to Apple: Google has adopted the same policy.

It's not clear what the best solution is here, or if the best way to have the conversation about it follows hyperbole like "the most disturbing thing".

I think password managers are on the whole a good thing because people are using more (stronger) passwords.

I also think the password manager could (at least on trusted hardware like an iPhone) provide some protection from the attacks you're alluding to, such as a tarpit that slows access to the password database, but they certainly won't offer any protection on a desktop machine without specialised hardware and it might be difficult to get right -- difficult enough that new security vulnerabilities are introduced instead.

What exactly do you propose?