So maybe this is resolved.
I raised a ticket and FM looked into the issue.
Apparently there was an existing instance of my Yubikey authorisation with Webauthn.
I could see the entry but was not able to identify it as being associated with my Yubikey.
Anyway, this existing instance was causing the error when I tried to re-authorise the U2F instance of the same key.
I have now removed the old U2F instance.
The Webauthn instance remains.
All seems to work ok now.
Thanks for everyone's interest and comments along the way.
I hope maybe this will help someone else if they hit the same issue.