Unfortunately, you can't use Ed25519 keys unless you have the latest/newest model(s) of Yubikey and that Yubikey came with at least a specific firmware version (5.2.3, IIRC).
Using a hardware token as the authenticator for SSH sessions. Taken to the fullest, this allows you to completely avoid password authentication for SSH, except for the initial upload of your public key.
U2F/Fido refers mainly to doing through the browser, but as you probably know, the browser is only the end of the line of a long chain of usability oriented changes. It's been a decade in the making. Now SSH is using that mechanism, just not through the browser. Personally I'm psyched, lots of apps can start using this approach and get a great user experience!
Edit: nope, seems ed25519 supported too https://manpages.ubuntu.com/manpages/focal/en/man1/ssh-keyge... although internet seems to suggest hardware support is far more limited. Tried generating one on MacOS and indeed my Yubikey seems unsupported.