[amarshall]

And the A in 2FA is authentication, not storage. The password vault is not a factor because it is not what is provided for authentication, the individual password is the factor. The fact that the vault being compromised reveals both factors does not make it no longer 2FA.

Colocating the storage factors definitely makes certain attack vectors possible that aren’t otherwise possible, but it’s still 2FA. Are hardware keys best? Likely, but still many probably have their password vault and TOTP application and storage on the same device (e.g. both Bitwarden and Authy on their mobile device) which is a middle-ground convenience vs. security between TOTP in the password vault and hardware keys—but I doubt many would say that it’s not 2FA.