But what I don't understand is how are passkeys improving what Apple provides here. You could have just done this with passwords and had all the ecosystem benefits you outlined.
One domain, one account.
To cover that gap, you get rid of passwords altogether, and now users lose access if the passkey fails to sync or isn't available on one of their devices (let's say a Kindle Fire tablet)
Passkeys being bound to the domain is neat, but not without tradeoffs and practical workarounds. At least that can't be the only aspect to look at when making a choice.