$ grep -i preferredauthentications ~/.ssh/config | sort -u
PreferredAuthentications password
PreferredAuthentications publickey,keyboard-interactive,password
[download]

More importantly this is the current distribution with a global setting and multiple Host entries with overrides

$  grep PreferredAuthentications ~/.ssh/config
PreferredAuthentications publickey,keyboard-interactive,password
PreferredAuthentications password
PreferredAuthentications password
[download]

Agreed it is important to know who needs password and who doesn't and for a really short test period it doesn't seem to have impacted us by removing the PreferredAuthentications override - ssh does seem to honor what is in the config file. Maybe something has changed over time and this functionality might have become redundant - is this something which can be retested ?