It isn't easy because it isn't always clear what works and what doesn't.
If you correctly chose Windows 10 as your operating system for the Applies to selection above, then your device isn't capable of creating Passkeys, which is your true issue.
Here's an official Microsoft document providing basic information about Passkeys, with the FAQ question excerpt I've included below pertaining to the requirements including Windows 11.
Passkeys frequently asked questions (FAQ) - Microsoft Support
"Why doesn't my Windows device have some of the passkey's options described in the article?
Here are some possible reasons:
To take advantage of the latest passkey features, you must use Windows 11. To verify which version of Windows your device is running, open the Settings app Glyph Library: fluent Glyph Name: SettingsApp > System > About."
It's possible to use a Passkey created and stored on your smartphone with Windows 10 for example, because I've done it with Amazon, but Windows 10 doesn't have all of the capabilities required to create and store them locally. Though I'm still not completely clear on all of the combinations that should be able to work, which means I agree that knowing all of these details makes their use difficult with Windows 10, so I've generally given up on them for now and instead continue to use the Microsoft Authenticator as my primary method of Authentication support.
However, I plan to revisit this when I get a new device with Windows 11 within the next year, since Windows 10 ends support in October 2025 anyway.
Rob