Perhaps what you are missing is the "middle ground" here because it is an implementation detail of some of the passkey implementations (especially some of the o

Perhaps what you are missing is the "middle ground" here because it is an implementation detail of some of the passkey implementations (especially some of the ones meant to be "consumer-resilient": derived keys. Rather than keeping every key for every site in hardware, you might use some secret shared between the hardware keys plus whatever site-specific salt/pepper/hash into some key derivation function (KDF). For those kinds of keys extraction is sort of meaningless: the private keys maybe aren't even stored at rest, they are re-derived as necessary. You can sync the encrypted shared secret and all the site-specific salt/pepper/hashes even to devices that can't decrypt them. (That's how secure but consumer-friendly syncing is built, and that's a part of how recovery pathways get built.) But it isn't useful on its own without the hardware keys that you can't themselves export. You can have syncing with the root keys being exportable/extractable. That's already how many of the consumer solutions are being built. That's part of where the consumer-friendly security is for Passkeys.