Thank you for posting this in Microsoft Q&A.
The "Passkey" sign-in method refers to using a passkey that is stored locally on your device, without the need for the Microsoft Authenticator app. This passkey is generated by Entra and can be used to authenticate to Entra without the need for a password. You can use a passkey to register a security key with your iOS or Android device.
The "Passkey in Microsoft Authenticator" sign-in method refers to using a passkey that is stored in the Microsoft Authenticator app on your device. This passkey is generated by Entra and can be used to authenticate to Entra without the need for a password, using the Microsoft Authenticator app as the authentication method. You can also register passkeys in Microsoft Authenticator on your mobile device. With an Authenticator passkey, you can have seamless single sign-on (SSO) to other Microsoft native apps like Teams or Outlook.
I was able to register passkey in Microsoft Authenticator app on Android, but I'm not able to sign-in to microsoft apps installed on the phone such as teams / outlook
You can't use passkeys in Authenticator on your Android device to sign in to other Microsoft apps, such as Microsoft OneDrive, SharePoint, and Outlook. Support for Android devices is coming later during preview.
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Thanks,
Navya.
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