One of the big reasons people hated on passkeys and smart wallets: a passkey is only accessible from a specific domain, meaning Coinbase could technically block you from your funds.

No longer! Coinbase Smart Wallet now has recovery keys (this was always their plan).

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Is the recovery key different than the seed phrase? Especially with services like icloud it's definitely a step up for people not having to manage 12 words in a piece of paper, that was never going to work for the common folk

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The recovery key is a seed phrase right now. 

I'm sure they'll make it easy to save to iCloud later. Progressive roll outs and all.