Passkeys is basically a brand name for "discoverable credentials" (a Webauthn term). They do a little more than that technically, but in practice their purpose is what you said. Replace passwords. Or more accurately usernames and password pairs. This is in contrast from 2FA, but even before Apple started marketing Passkeys the FIDO standard supported the concept of Passwordless authentication, alongside 2FA.

Passkeys came together with multi-device syncing when Apple introduced them and IIRC it was pushed as their killer feature by Apple back then, but passkeys can also be completely device-bound. The marketing around this was all quite confusing, but it's a bit too late to fix now.

What we got, as far as the average consumer should be concerned, is that "passkey" is any authentication mechanism (not the actual credential) that can replace a password. And it's still confusing.