you are correct in assuming that handing out all your passwords to a foreign machine is a poor idea and creates a ton of problems and risks. Countless users lost all their passwords in this way. Maybe their e-mail got just greylisted for 1 minute too long and – boom – you get shut out of your account for no good reason, and there is no recourse. Inside of firefox there you are being given some control over what data is being synced. But other aspects are beyond control of the password owner. So there always remains some risk and vulnerability. Much like a nuclear power plant, which is totally claimed to be "super safe", before it, however, explodes. This is why everyone is so reluctant and why moz://a pushes so hard for LOCKWISE syncing against better judgement given by a lot of users who got burnt this way. We need honest advice in this sensitive area rather than marketing blablabla.