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For me, it works well, especially when the codes come by sms/text.

Email codes are a different story: some work and some don't. I was hoping Apple would improve this as we're now on iOS 26 (26.1 beta in my case) but it's not getting better.

I still find it very useful though, especially that it deletes the relevant message after the code has been pasted, and that it now works in Firefox (MacOS - not tried on iOS).
 
I have no issues using it with paypal codes, across iPhone and MacOS. The handful of times that it has not worked for me was only because the app that was requesting the code wasn't compatible with auto-fill. I don't know what's wrong with your situation, but it's definitely not working as intended.
 
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