Microsoftcharliebeals LibbyP is partially correct. I put forward a couple of scenarios where this is not really true, for instance when setting up a new computer TAP cannot be used to register a security key during setup. At least not right now.
The reason you are getting asked for a phone number or authenticator app is because of SSPR, self service password reset where you can use sms or authenticator app to change your password. This is due to the requirement from microsoft to use the combined SSPR and MFA registration wizard. so the phone/Authenticator questions have another reason than MFA. On the other hand this practice should be abandoned since a user signing up with a TAP for passwordless authentication bu design won't ever need to change their password since they have none.
Microsoft should work on this and release a NEW registration experience for passwordless that doesn't ask for redundant password reset methods.
