It's difficult to explain this issue because I haven't been collecting a list of websites this happens to me on, but essentially instead of the typical pop-up with the TouchID verification to create/use a passkey the following modal shows up:
This effectively stops me in my tracks, as nothing I do after this point works, forcing me to cancel and use an alternative login method.
When asked to use passkey authentication, I should always be greeted with a proper macOS passkey authentication method.
Version 0.99.129-beta (WebKit 619.1.11.111.2)
Sequoia (15)