Then you'll login to your Apple iCloud account using your password.

Passkeys are just passwords that require a password manager; you can't login to a password manager without something outside the password manager, usually a password. (That's why they call it "LassPass" and "1Password"; there's one last password you'll still have to maintain.)

No password manager tries to get you to login with a passkey without setting a password, for precisely that reason. Apple, Google, and Microsoft do invite you to login to their password managers via passkey, because it's convenient and unphishable, but they always also allow you to login via password (or "backup codes", which are just backup passwords).