Yeah, this makes sense for corporate environments with keys backed up to a centralized location like Active Directory. Not for consumers with no reasonable way to keep some key like this in a safe place as a “break glass in case of emergency” option.
It backs up to the Microsoft Account
Still, some people create an @outlook.com email, set up no recovery options, forget the password, and find themselves locked out.
If you’re doing things properly, you’ll know your Microsoft account password or have it in a password manager (and maybe have other account recovery options available like getting a password reset email etc.), and have a separate password for the PC you’re locked out of, which would be the thing you’d forgotten. If someone isn’t computer-literate, it’s totally plausible that they’d forget both passwords, have no password manager, and not have set up a recovery email address, and they’d lose all their data if they couldn’t get into their machine.
Microsoft fucked that up in the Home edition, where the key in your account won’t work.
Timestamp 8:48 in this video
https://youtu.be/pIRNpDvGF4w