Mmmm, I don't know the specifics but from what I remember the full access was to let it peek into your social accounts in order to learn your vocabulary.
Either way, I suspect that the issues everyone is having only pertains to entering passwords on websites. There is probably a bug there.
That is upto the keyboard software itself. Swiftkeyboard gives you the option to learn keyboards from social, as well as share your custom dictionary across various devices. So your experience is a bit more consistent across your iPhone, iPad and Android devices.
But that is just a toggle, that you turn off on the first or second screen when configuring it.
Like I said, the Full Access is needed for the keyboard to talk to the container app, to provide the value adds. That does not automatically imply that they will upload your passwords everywhere unless you tell them to do that, it's just needed due to the sandboxing of IOS.
Passwords will remain stock keyboard, it is Apple's way of trying to convince people that they have their safety at heart. That's also why you see a lot more 1Password integration in apps making this moot.