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This policy controls the browser's ability to save passkeys in the built-in password manager. It does not limit access to, or change the contents of, passkeys already saved in the password manager. If the PasswordManagerEnabled policy is set to Disabled then saving in the built-in password manager is disabled in general, including passkeys and passwords, and thus this policy is not applicable.
Setting the policy to Enabled or leaving unset means that users can save passkeys in the built-in password manager if signed into Google Chrome.
Setting the policy to Disabled means users can't save passkeys to the built-in password manager, but previously saved passkeys will still work.