This is why when people tell me that Apple is secure, I laugh in their face. Apple has always lagged on security concepts because people are so lazy with letting them do everything for them. If you disable or change any form of login security on my Google Pixel phone all apps reset themselves to asking for passwords because device security has been changed. Also, the thief will be in a world of hurt trying to change my Google password since I use a physical security key on the Google account which is required for any account changes like password. They have had this protection for years and Apple just finally added physical security key protection within the last 6 months.
I have it enabled on my Apple account now even though I don't really use an apple device anymore. No more prompts on devices to make changes to my Apple account either now, because once you add the physical security key is required for all changes.
But because Apple users are not known for being security centric, an excellent feature just falls by the wayside. Most people can't keep up with the change in their pocket, let alone keep track of a FIDO/Physical security keys. Just realize that you must be responsible with using the security key route. IF you lose your security keys you are locked out of accounts forever.
Just keep in mind even if you have a physical security key it is NOT required to change the Apple ID password on an unlocked device that was already signed in.
(That surprised me too). If you have the iPhone passcode (or any apple device passcode), you have the keys to the kingdom. No security key is needed even if you registered them.
What should really happen is they either require the old password to change to the new one PLUS the passcode, or the physical security key PLUS the passcode. Something you have, something you know - 2 factor.
Right now it’s a huge hole because if you have the passcode to the phone - which is very easy in some cases to get (I’ve seen many “1111” codes while out, friends etc). You can have access to their entire iCloud everything. Including resetting FaceID or TouchID.
Bottom line - make the passcode more difficult and HIDE it when you enter it in public. Never share it.