Exactly, that's it. Two parties have a shared secret of, say 16 bytes total, upon which authentication depends.

They could have a one byte long password but a 15 byte long shared secret used to compute the MFA code. The password is useless but the MFA seed is unguessable. Maybe have no password at all (zero length) and 16 byte seed. Or go the other way and a 16 byte password and zero seed. In terms of an attacker brute forcing the keyspace, it's always the same, 16 bytes.

We're basically saying (and as a generalization, this is true) that the password part is useless since people will just keep using their pets name, so let's put the strenght on the seed side. Fair enough, that's true.

But if you're willing to use a strong unique password then there's no real need.

(As to keyloggers, that's true, but not very interesting. If my machine is already compromised to the level that it has malicious code running logging all my input, it can steal both the passwords and the TOTP seeds and all the website content and filesystem content and so on. Game's over already.)

> This is why the FIDO/hardware passkeys/etc are so much better

Technically that's true. But in practice, we now have a few megacorporations trying to own your authentication flow in a way that introduces denial of service possibilities. I must control my authentication access, not cede control of it to a faceless corporation with no reachable support. I'd rather go back to using password123 everywhere.