Isn't the difference that with passkeys you'd have 1 password for all passkeys where when using passwords directly you'd have a different one for each site. The benefit of passkeys here being that you shouldn't need that password most of the time so you don't expose it. You get the benefits of unique passwords per-site with only 1 actual password. The same benefits of a password manager but with better unique passwords.

The main downside to passkeys currently is that I cannot be my own service provider. Having that I don't see a big downside.