@FediTips for many/most folk and situations I agree. There are some specific use-cases for this; eg what we've setup on zeroes.ca where the mastodon account is used to sign into a closed pixelfed server, so a second username+password are not required and admins effectively don't have to manage a second user directory.
"Sign in with" is kinda the de facto language for oauth/sso across the web and it mostly operates like this, where the site being logged into essentially creates an account for the user without requiring them have another set of credentials. Doesn't mean it's not confusing, though.
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