Comment by Borealid

The best cryptographic key in the world would be defeated by a breach of your filesystem.

The comparison here is between in-memory cryptographic keys and in-memory passwords. Yeah typing a password into a keyboard adds a vulnerability in between the keyboard and the computer, but it's not a huge difference in security posture. If the device using the secret is compromised, so is the secret, whether it came from the user's mind or not, whether it was stored encrypted before the user used it or not.

A physically separate hardware security module does add protection but I think that's a different conversation.