https://support.apple.com/guide/security/secure-icloud-keych... (describes how both approaches work)
https://support.apple.com/en-us/HT204915 (documents that two-factor authentication is now effectively mandatory, which makes using recovery keys impossible)
The device PIN is now exclusively used (off-device!) for iCloud end-to-end encryption key recovery: https://support.apple.com/guide/security/escrow-security-for...
Are you sure it's either/or? Have you gone through the process, and are you sure the PIN is required off-device, rather than ? If that's the case, I do agree that it's not good.
Also I don't quite understand the threat model where a stronger authentication to iCloud allows for weaker data encryption. Considering Apple is usually pretty spot on with these things, this would definitely stick out.