This is super annoying! Does not make any sense the amount of clicks that I have to do now to choose the security key. Why not the option to select a default?
Likely because security keys are really quite rare for Microsoft personal account users who are typically consumer users.
It's also probable that Microsoft is more focused on making the new passkeys and Windows Hello itself easier to use, since most typically consumers will more likely use their smartphone combined with their other devices like tablets or laptops to store these, while the security keys have more often been used by commercial or government users who receive more training.
I have watched this thread since early on but haven't truly tried to determine whether there's a simple way to organize these more effectively for everyone. However, I suspect that over time Microsoft will find the best way to deal with most of these logistical issues using tricks some here have suggested like choosing the last used option as the default.
For now though I'd expect them to focus on stability over ease of use for any particular type of authentication device.
< EDIT > BTW, the only way any of you will truly get your wishes known is to use the Microsoft Feedback option to log and have others vote on your preferences, since it's rare that anyone here is truly bringing these Community forum posts to anyone's attention inside Microsoft, as most here are volunteers or contractors and not true Microsoft employees.
Rob