So maybe it didn't improve your security, if you were already letting your password manager generate distinct passwords, but it almost certainly improves the median user's security, who has come up with a weak password they think is strong, and may well use that password on multiple websites.

Generating the accout password instead of allowing a user-supplied password would also work here (and incentivize the use of password managers, if enough websites did it), but I would guess getting people onto SSH keys is useful for them in general - e.g., it allows them to make 2FA or CAPTCHAs mandatory for use of high-abuse-potential features like CI or Codespaces.