The passwords are stored in an easily obtainable format.
So, why not change THAT and store them encrypted with a master key?
If you are leaving your laptop around untrusted people, you're going to have problems.
True. But why make it even easier for someone unauthorized to retrieve your passwords?
Why is it only the browser developers who come up with that arguement? I've never read such a statement from any other team. And why aren't other software systems do it that way if it is so insecure and "falce-security" so encrypt user passwords in a local db? Couldn't even an OS use that argument and say "hey, you got physical access to the system, here are all the passwords in plain text, have fun!".