Are you enforcing key restrictions in Entra? If so you will need to add these
https://learn.microsoft.com/en-us/entra/identity/authentication/how-to-enable-passkey-fido2
- Enforce key restrictions should be set to Yes only if your organization wants to only allow or disallow certain security key models or passkey providers, which are identified by their AAGUID. You can work with your security key vendor to determine the AAGUID of the passkey. If the passkey is already registered, you can find the AAGUID by viewing the authentication method details of the passkey for the user.