Does Apple have passwords stored and generation options?

Yes. Safari can generate secure login passwords and stores them to an iCloud Keychain for access across devices.

For info, please see –

Set up iCloud Keychain - Apple Support:

https://support.apple.com/en-us/HT204085#setupicloudkeychain

While at it - profile showing Big Sur 11.1 which is way out dated. The current version is Big Sur 11.5 and then a Security update to 11.5.1.

Suggest making a Time Machine Backup Before attempting the updates.

Welcome and thank You too :-))

As for iCloud versus Time Machine Backup. iCloud is really only good for its' intended use. That is, a Conduit to have files on the cloud so changes made on one of your apple devices is reflected on all other of your devices. iCloud was not designed or intended as an External Drive and used for Storage or Archives.

Now Time Machine Backup is invaluable in tricky situations and can even Revert to a Previous Version of macOS - yes previous version. Just go to Apple Support page and search " how to revert to previous version of macOS " Am on a Windows 10 Pro computer at the moment or would provide a link.

As mentioned link for Time Machine Revert - Revert your Mac to a previous macOS version