In this scenario where it's only a second factor, yes, it relies on you possessing a Security Key, and on the bad guys not possessing it. This matches the threat model, which is typically that bad guys are not your flatmate or your mother they live in another country and will never meet you.
WebAuthn (and U2F) were specifically designed to register multiple tokens, the server-side stuff described explains how a site insists "Look I need to register a new token, not these tokens which I already registered" while also being open to whichever token you have on login, "Any of these tokens can log in, I don't mind which". So I have a token in my pocket, but if I got mugged I have a backup token at home that can substitute. Well designed sites let you nickname them during registration so you can go "I lost green hulk token but I still have Yubikey" later.
Yes, if you use the flows where both factors are handled by the FIDO token then you're "back to passwords" but with a very important difference. Very, very important:
Right now your password for news.ycombinator.com is known by the Y Combinator servers. Now, I'm sure they take good care of it, using a modern salted and pessimised hash for the purpose, but this creates many extra opportunities for vulnerabilities and a bad guy only needs to find a crack in one place.
Whereas if I have a PIN for my FIDO token the PIN lives on the FIDO token. Not on every web site I use WebAuthn with, not in a database that some poor new sysadmin accidentally uploads to the Cloud, it's not sent over the wire to some Java backend sevice that might accidentally log it, or whatever. The device can insist upon rate-limiting attempts because it's a piece of hardware, like an iPhone.