> OK so in the case of a "normal" lost password then how is it that it's safe on Apple's servers?
In a word, it isn't. The new password is no more nor less safe than the old one. Or are you asking about the data, not the password? Pretty much the same answer.
Actually, your passwords are gone if Apple resets your Apple ID.
If Apple resets your Apple ID password and you restart your device (remember: the Apple ID is kept decrypted in RAM while the device is running), you lose the entire keychain and must re-enter all passwords.
