A hardware password manager, as I currently picture it, won’t protect against a keylogger - the base version uses USB-HID emulation, and that’s an honest limitation. But it does three other things that software solutions handle far worse:
First, it physically isolates the entire database from anything running inside the OS. Second, it gives you maximum protection instantly, with zero configuration, because it handles password generation, storage, and keyboard input all in one. Third, it gives you the convenience of a cloud solution - access from anywhere - without creating the attack vectors that come with actual cloud solutions.
There are plenty of reasons for a hardware approach, and they’re not just about today. Computers become obsolete, technology moves on, one encryption scheme replaces another, one company replaces another. What’s relevant today might not even run in a couple of years. AI is advancing and already enabling better cracking tools. And people genuinely need a hardware solution - I see it in the fact that plain paper password notebooks are still selling well on Amazon.
The fact that you configured your system for passwordless access proves it’s possible. But the fact that it’s just been me, you, and maybe two and a half other people doing it says the setup is extremely exotic. Everyone else picks one of two options: give up on passwords entirely, or type one even at the BIOS level. One thing’s reassuring though - you and I both agree passwords are tedious and should be automated. I’m with you on that: people shouldn’t have to think about passwords.