Passkeys are built on the FIDO2 standard (CTAP2 + WebAuthn standards). They remove the shared secret, stop phishing at the source, and make credential-stuffing useless.
But adoption is still low, and interoperability between Apple, Google, and Microsoft isn’t seamless.
I broke down how passkeys work, their strengths, and what’s still missing
But the third parties actually have no access to your passkeys. The passkey stored are end to end encrypted blobs. So even if anyone gets hold of it, its useless. But a password for instance when leaked from 3rd party can be used easily as the server will have to decrypt the password at one point. So the means to decrypt the password will be at the server but passkeys aren’t like that. The private passkey can be decrypted only on your device for signing the challenge. Basically your exposure was basically halved.