This is a bit unfair, since, as you admit, these changes are being made precisely because users don't understand the sync model, and the mismatch causes things like lost data.
Notably Chrome sync does let you encrypt all data locally, but it works the same way: if you lose your passphrase, you can't sync a new machine with it.
The big difference is that it's also tied to an account, which lets you do things like use it as a backup and restore service (the analog would be a pair code that's persistent and well known to the user). The current Sync pair code system makes your synced data just an extension of the data in your browser (or browsers, if you already use more than one). Lose that browser and you lose your data. The new Firefox Sync looks like it provides that now, which should ease a lot of user pain due to lost data (and not just annoyance).
Notably Chrome sync does let you encrypt all data locally, but it works the same way: if you lose your passphrase, you can't sync a new machine with it.
The big difference is that it's also tied to an account, which lets you do things like use it as a backup and restore service (the analog would be a pair code that's persistent and well known to the user). The current Sync pair code system makes your synced data just an extension of the data in your browser (or browsers, if you already use more than one). Lose that browser and you lose your data. The new Firefox Sync looks like it provides that now, which should ease a lot of user pain due to lost data (and not just annoyance).