One key benefit regarding hacking: the data that’s passed back and forth between the user’s browser/app and the website/service is a challenge and a response and is no longer sensitive like a password is and the authentication related data (the public key) that the website stores for a user’s account isn’t useful to an attacker.

One key benefit regarding phishing: passkeys/WebAuthn credentials incorporate the domain name into part of the authentication and it’s enforced by the browser. This means that using a passkey/security key on the wrong site won’t give an attacker anything useful unless they also somehow control the DNS and have a valid TLS certificate to impersonate the site with. This is unlike the situation with a phishing website where a user can be tricked by a fake but convincing looking website into giving over not just a password but a one time code provided through SMS or a TOTP.

One key benefit regarding usability: The user just has to choose which account to log into from their password manager instead of having it need to autofill correctly on the website (I still run into sites that don’t autofill right). They also don’t need to worry about any specific password complexity requirements or changing passwords in response to breaches or password expiration times.