Long answer: In practice, TOTP schemes are used (from a webadmin point of view) just to stop credential stuffing attacks [1].
There is very little additional security in generating TOTPs on a dedicated device, such as a smartphone, compared to generating them on the password manager itself. Threat models in which a separate setup would have a benefit include only breaches of your password database itself.
For savvy users with unique passwords, protecting against that threat model offers little benefit at a significant convenience penalty, as such attacks are unlikely to begin with. If MFA with hardware tokens is not an option, then it might not be worth the hassle of TOTPs.
As such, password managers that offer TOTP are useful in scenarios where using TOTP is mandatory and does not provide security benefits.