A password manager stores your vault in the cloud as encrypted ciphertext, not readable passwords, which is why recovery must be set up before you forget the master password

When you save a login to 1Password, Bitwarden, or LastPass, the software does upload information to a cloud server. The cloud is still storing your passwords, but only as part of an encrypted vault rather than as readable text. Standard cloud encryption and end-to-end vault encryption are therefore not the same thing. Someone holding a stolen encrypted vault can test guesses without asking the service for permission each time. The account password remains critical because attackers who steal encrypted vault data can work on it offline.