At least they show you their requirements. Usually I use passwords with up to 150 characters (including special ones). Getting a vague response like “Password is invalid” is so annoying. I then have to remove special characters and reduce the length step by step until it is accepted by the website. (But 20 characters is way too short, resulting in these hilarious other requirements. You just want to create an account, without having to do a PhD in creating passwords first.)

Passkeys are basically FIDO2.

FIDO2 wasn’t really adopted, so now they are marketing it under a new name (while also allowing more liberal ways of storing the keys, no “normal” user would keep a FIDO2 stick with them all the time). So, you can still use your FIDO2 stick (as long as it is not too old I guess) or a password manager like KeePassXC. No need to switch to the Apple/Google/Microsoft stuff.

I have already contributed two smaller fixes to Piped, I might look into that as well.

As others have already said that, this is caused by Google/YouTube, not Piped. (They should make that more obvious.) Try another instance (Preferences -> Instance) until it works. The official kavin.rocks/kavin.rocks (libre) seem to be blocked by YouTube more often than other instances. The smaller the instance, the better (probably).