Jon Brodkin gives a good overview of iCloud Keychain.
It is a very good read to understand the function, and limitations, of iCloud Keychain. However, Brodkin needs to manage his expectations. You get what you paid for.
But in almost every other way, iCloud Keychain falls short of the functionality one expects from a paid password manager.
I think this is precisely what iCloud Keychain is built for: users who don’t have a password manager or refuse to pay for one.
iCloud Keychain is indeed a useful addition to OS X and iOS, especially for people who use Safari across both operating systems. On iOS, iCloud Keychain fills the chief gap in third-party password managers—the lack of integration with Safari. For something that comes free with the operating system, that’s a nice feature. Combined with the automatic password generator (despite its non-customizability), iCloud Keychain can help people who don’t already use a password manager improve their defenses against hackers.