The new password sharing feature just applies to ones that are stored in Google Password Manager, the company’s service that natively stores your passwords and passkeys in Chrome and Android and is linked to your Google account. As of today, the new password sharing feature works on mobile — but apparently not via Chrome on desktop, yet. Once you share a password with one of your family members, a copy of it will be saved into that member’s own Google Password Manager.
You can’t use this feature with people who aren’t in your Google-sanctioned family group (which can only have up to six people). So if you want to share a password with anyone else, you’ll need to use Nearby Share to zap it over in person or use more rudimentary and / or less secure methods.