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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.
What is your use case for this?
At my old job we required these for "thumb drives" and all they ever did was make reformatting machines pure hell.
In the ExplainingComputer's video he was using it to store his passwords. I'm not sure if he was doing it in conjunction with something like an encrypted password database or a plain text file.
So it is confidential files in a public setting.
This is a solved problem that doesn't involve a small overly expensive flash drive that requires very blatant operation to unlock when needed.