No one claimed it's a hardware security token, but the private keys are stored in iCloud Keychain, which is end-to-end encrypted. Apple cannot access your private keys even if iCloud is compromised by an external attacker or employee.
If you're curious about the security engineering, you should watch the "Synchronizing secrets" part of this Black Hat talk from 2016: https://youtu.be/BLGFriOKz6U?t=1353 or you should read the "Synchronization security" section of the "About the security of passkeys" support doc: https://support.apple.com/en-us/HT213305
I does not make sense to use a proprietary internet connected application on your machine and worry that that the servers might be nefarious.
Apple has no access to keychain data: https://support.apple.com/en-us/HT213305
Which again, seems like the worst of both worlds.
You login to iCloud which gives your device write access to iCloud storage. The device creates a private key inside the TPM, and uploads the public key. When you add a new device, one of your existing devices has to use its hardware key to sign your new devices key. It also must be signed by a second key derived from your iCloud password (so you). Apple doesn't go into the details on this, but I believe the originating TPM also signs the key with a chain of trust that goes back to Apple itself.
The keychain is encrypted locally and exported to iCloud. The key used to encrypt the keychain is also encrypted using the public keys of all trusted device keys in iCloud that have both a signature from another trusted device and from you.
As a user you can also just open up Keychain Access on a Mac and ask it to generate a CSV export of your entire iCloud keychain - which is how you would go about migrating to another password manager.
Apple does some additional trickery to synchronize credentials between devices, but they get away with this because their devices have contained dedicated silicon for sensitive data management for years[1]. They have some user-facing documentation on how their passkey implementation is synchronized between devices without any secret disclosure here[2][3].
[1]: https://support.apple.com/guide/security/secure-enclave-sec5...
[2]: https://support.apple.com/en-us/HT213305
[3]: https://support.apple.com/guide/security/keychain-data-prote...