The theater is that you're protecting a key but not the account the key protects. Yes, you'll never lose the actual RSA key bits to an attacker. But that'll be cold comfort after an attacker uses a hijacked SSH process to compromise every account you log into.
There's some value to the Y4 SSH key, don't get me wrong. It's just much less value than you'd expect from all the ceremony.
Added bonus is that not only does it work with SSH, but you can use those certificates for TLS mutual authentication in web browsers. Works out of the box on Mac/Windows.
But if you enable (and require) the touch feature, it'll be pretty obvious if someone's trying to use your agent to authenticate somewhere else, no? I'd certainly notice if I had to press the button twice while I'm logging into a machine that should only request auth once (i.e. I'm not proxying through another box).
Happily, this won't work if you only ever use SSH with a non-shell command, e.g. as a fancy encrypted netcat(1).
i think part of the "theatre" is the whole convenience for safety thing. a few years ago it was gospel to change your passwords all the time. then some data started to point to this actually might be bad because it forced users into to using easy to remember things like sequences, or write them down (often in something like notes app or under keyboard on a sticky).
while this may not be the good for military gov etc, it's probably a lot better for average joes. by making it easier to have pretty good security method, i can reasonably expect my users to stop doing stupid shit like keeping their keys on google drive (because "wernt you the guy who made us use drive because it's more secure than ftp?!"- yes many users are petty like that).
How is this different from your phone?