It is because desktop linux does not have passkey interface built into the OS. There needs to be TPM, systemd, etc need to talk altogether.

Linux most definitely has a TPM interface, it's called /dev/tpmrm0 and plenty of libraries for accessing it (eg. https://github.com/parallaxsecond/rust-tss-esapi/ full disclosure: I'm co-maintaining it). Systemd is not needed for that.

So where are things falling down? I seem to be unable to get passkeys to work in linux; Chrome or Firefox. I’m suspecting the issue is something to do with bluetooth.

IIRC, all these hardware exist. Software is not 100 % fine for them. The point is to have OS and password manager trust each other. Once this is done then all should work. That should allow for the browser to query the password manager for appropriate info. At the moment, password manager is poorly integrated onto OS.