what is keychain

Apple Keychain holds your digital keys, including accounts and passwords, and passkeys. It acts as a password manager (including but not limited to websites), but also holds Wi-Fi networks, certificates, secure notes, and more. It can also suggest new passwords and passkeys for you, which will be stored for next use. You may rarely need to look up a password, as that gets filled in where appropriate, in an obfuscated way (••••), through authentication. The master key is what you unlock your device with, which may include passcode, Face ID, Touch ID.

Keychain (software) - Wikipedia

Find saved passwords and passkeys on your iPhone - Apple Support

With iCloud Keychain, this important information can be held in the cloud, and thereby be available on all your Apple devices, automatically ‘synced‘. This is optional. Active it if you want this. Highly recommended if you have more than one Apple device, though.

Set up iCloud Keychain - Apple Support

Make your passkeys and passwords available on all your devices with iPhone and iCloud Keychain - Apple Support

iCloud Keychain security overview - Apple Support

It is just a matter of turning it on. The reason is to autofill Passwords, Passkeys, and Credit Card Info so you do not have to manually type them. With iCloud, they are synced across devices using the same Apple Account and you can share them with Family members or Trusted contacts. The data is end to end encrypted so no one else can view the info when it is stored.

Set up iCloud Keychain - Apple Support