If I had to choose between two evils, I'd rather upload my passport to cloudflare and be able to get anonymous tokens from their API (RSA blind signatures or whatever) to prove I'm a real person and browse the web with Firefox and no closed source components, than be forced into hardware attestation and a locked-down device. But uploading government IDs to a (few) central point(s) of trust will create outcry about privacy whereas hidden cryptography baked into normal people's devices with Google Play Services and Apple Something and just working in the background goes unnoticed until everyone (the 99% who aren't on a custom ROM) already experienced the benefits
For webauthn I know it can be all software, I've used virtual devices for testing a server implementation's security, but I vaguely remember there also being a mode that requires having keys signed by a hardware vendor. Just not sure anymore if that was webauthn or something else related to authentication