All this on and on round and round seems to be utter nonsense. No other way to describe it.
Yahoo is trying to do its own 2-factor and app validation, parallel Apple is trying to do its own. None of them are solving the problem.
I originally tried setting up 'Secure Key' for my iPhone App - (as originally suggested by Yahoo) - did not help at all.
Now this new Yahoo thing "Create App Specific Password". You cant even do this, only way to do this is you have to delete the Yahoo Account in the iPhone App and then try recreate it (there is no other way to update the password). The directions state 'update password'.
I went this route - now the account does not get added in the iPhone App - as it says account already exists. I don't know if it (mistakenly) referring to the acct I just deleted or to the Account I have with the Yahoo Mail app (I have this). Also it asks for 'Secure Key' and not the "App Specific Password" which I had just created.
So now I am left without yahoo account on my iPhone App. Maybe (in all likelihood) this was the ultimate objective of Yahoo and had to go thru all this to achieve their goal.
What utter nonsense.
This whole thing about additional security is total crap, either your mail should be working or not - nothing in between - sometime working sometimes not.