One maybe non-obvious benefit I see in that from the individual Tailscale user perspective is that only having SSO rather than username/password keep the security of my login in the same bin as the larger customers where Tailscale makes their actual money.

A username/password would be perfectly fine for my use-case as an individual user using Tailscale for my homelab and personal devices. But I suspect the majority of real paying customers don't want a separate authentication flow just for Tailscale and would rather use the SSO they already have. I have confidence Tailscale wouldn't half-ass usernames and passwords is they offered it even if it was mostly just for non-paying hobbyist users, but I'm also sort of glad I get to bucket my account security risk with the people paying their bills.

Being an identity provider for anything important is the freaking worst. Exposes you to a million problems. You need human support for login problems and lost MFA tokens, and you are an attack magnet.

You become responsible for keeping those credentials secure, among a whole host of other problems. (Abuse like credential stuffing (more), data breaches (more), account farms (more), and so on.)