I think I mostly agree TOTP in password manager is useless, but it's not worse than not having TOTP at all so it's whatever.
The protection offered for TOTP in a password manager is from people who reuse the same password on multiple sites and some other site gets hacked. In that case, the attacker would not be able to login, regardless of having the password.
Also, once a system is so thoroughly compromised that the attacker can install a key logger or dump a password database, that system and all the user accounts are already completely compromised.
TOTP at this point is essentially a forced password that changes every 30 seconds instead of an actual additional factor, however in many cases that’s good enough.
It is still effective for the first protection if you store your codes in your password manager, but less for the second. I say less, and not completely, because if your machine is compromised, gaining access to your phone too is only a matter of time. Of course this can be mitigated why proper hardware tokens, but most people aren't using those.