It seems like the benefits are having the device lock/wipe itself after a set amount of attempts in case of a brute force attack and not having to run software to decrypt the drive on the device you plug it into.
I included a picture of the IronKey Keypad 200 but that's just because it's the first result that came up when I was looking for an example. There seem to be a few other manufacturers and models out there and they probably have different features.
I am curious what do you think of them? Do you think they are useful? Do you find it more a novelty?
It was an ExplainingComputers video titled Very Useful Small Computing Things that made me think of them.
I have this device and use it to store my keepassxc and onlykey backups, and it's useful to me because I've stopped using passwords (I only need to remember the pins for these devices which can unlock my keepass dbs that have everything else).
It seems secure enough for my use case, especially since the files I store in it are themselves encrypted (the onlykey backup still requires a pin), but I still want them to be difficult to access.
I've had to rely on it before but only because I didn't prepare a backup onlykey ahead of time- ideally it should be one of many recovery methods. But so far it's worked great for me.