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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.
I think you might be confused. I'm not saying these devices are good. I started the post by asking if people thought they were a novelty. I just don't think it's as black and white as you are making it out to be and we got off on a tangent about passwords.
I think often enough people have a few numbers memorized that they can use and a lot of the time they're going to be too obscure to social engineer. I don't think you could do some CSI Miami style deduction to easily find out a passcode that's over ten digits in length.
I will admit you could probably brute force it and it's going to take less time than an alpha numeric password.